The first ever report mapping the UK’s immersive specialist businesses highlights the rapid expansion of the sector.
Launched on 21 May 2018, the Immersive Economy in the UK Report defines the scale, nature and economic value of ‘immersive specialist’ businesses for the first time ever.
This report was commissioned from the innovation foundation, Nesta, by Immerse UK with funding from Innovate UK. It quantifies and describes a fast-growing, confident and export-intensive industry that is already adding economic value to the UK.
These findings provide crucial insights and intelligence that will help us to support the complex needs of this emerging business community. This includes ensuring that investment is in place to secure the UK’s position as a global leader in immersive technologies.
Key findings include:
- Immersive is already an economic reality in the UK
There are around 1,000 immersive specialist companies in the UK employing around 4,500 people and generating £660 million in sales, potentially representing as much as 9% of the global market share. If UK specialists grow in line with market forecasts, they stand to generate over £1 billion in sales in 2018. We also estimate that half a million people work in companies with some participation in the immersive economy.
- Immersive is a young, growing, confident and export-intensive sector
Half of immersive specialist businesses in our data were incorporated since 2012, when the ‘immersive boom’ truly began. Six out of 10 immersive specialists grew their turnover in the last 12 months, and 90% were confident about their future prospects. 70% of those we surveyed are exporting immersive-related products and services, with a particular focus on US markets.
- Immersive companies are providing value in the creative industries and many other sectors
Although 80% of the companies we surveyed operate in creative and digital markets, two-thirds mentioned other markets, ranging from education and training to architecture, advanced manufacturing and energy. Immersive technology produces a variety of benefits for its adopters, from increased competitiveness through innovative products to improvements in process and more visibility in the market.
- Much of the immersive activity is concentrated in London, but there are hotspots of activity across the UK
38% of immersive companies are to be found in London, mirroring the picture across the digital and creative industries. Other locations across the UK have substantial numbers of immersive companies, including Brighton, Bristol, Newcastle, Liverpool, Manchester, Cambridge, Oxford and Edinburgh. Access to infrastructure and technological expertise are important drivers of success everywhere in the UK, while skills shortages are the biggest challenge for the sector.
- Immersive is a young and emerging sector and suffers from fragmented technology ecosystems and issues with skills supply
More than 80% of the companies we surveyed identified issues with the technology ecosystem such as lack of device penetration and fragmented standards. More than two-thirds worried about access to skills and 60% of immersive specialists identified access to finance as a barrier. We found that immersive specialists tended to be stronger and more successful users of finance sources related to technology and startups, such as equity, accelerators and co-working spaces. In contrast, they relied less on loans, possibly due to their reliance on intangible assets and a lack of sectoral expertise among banks.
- There has been a rapid expansion in the levels of public support for research and development in immersive technologies
We identified 253 immersive technology projects worth a total of £160 million in UK Research Councils, Innovate UK and EU Horizon 2020 open datasets. The funding devoted to immersive technology projects was nine times higher in 2016-2017 than in 2009-2010. Three in 10 immersive specialists benefited from tax incentives in the last 12 months, and two in 10 received some sort of national grant.