By Philip Mavrikis
In the U.S., 673,656 businesses define themselves as part of the creative industries, with almost 3.5 million employees among them.2 Many of these are small businesses. For example, of the 93,000-plus businesses in the film industry, 87 percent employ less than 10 people.3
As in many other sectors, the main challenge for SMEs in the creative industries comes from the rise of technology-oriented “supercompetitors” with the capital to buy content, invest in startups, and acquire maturing businesses.4 But the prevalence of these supercompetitors does not mean SMEs cannot compete. New technologies and avenues of revenue have helped level the playing field and allow SMEs to carve out a piece of that growing international trade in creative industries.
In rapidly changing markets, the ability to adapt quickly and have access to technology helps SMEs compete with large corporations. Whereas SMEs couldn’t afford to create substantial IT infrastructure in the past, they now have access to cloud-based services, which are largely pay-as-you-use. Remote working allows SMEs to function with little or no physical office space, attract talent from afar, and enables team members to access IT capabilities remotely.5
The smartphone alone provides SMEs in creative industries with the ability to find new international trade opportunities. In 2015, the Oscar-nominated film Tangerine was shot completely on an iPhone, using the Filmic Pro app that cost $8. While the filmmakers used special lenses and did post-production, the movie is an example of how DIY filmmakers can create something of high quality for little money.6
Emerging technologies such as virtual reality (VR) and augmented reality (AR) are also opening up international trade opportunities for SMEs in creative industries. As software and hardware both improve, Goldman Sachs predicts AR will “eventually become ubiquitous as smartphones.”7 AR development costs range from around $5,000 to $30,000, depending on the type of AR and features, placing it within the price range for many SMEs.8
Another major international trade opportunity for SMEs involves their ability to get close to their customers. Many smaller creative businesses are actually more adept than larger businesses at cultivating and catering to devoted fans, which fosters loyalty. Successful fan engagement involves interacting with consumers on multiple platforms (social media, video, podcasts, etc.), personalizing their experiences, and staying more present in their lives.
Niche audiences can often turn into the most active fan communities, attracting others and accelerating organic growth.9 For example, Peloton, which sells personalized exercise bikes, now successfully streams exercise classes to over half a million devices. In another example, the video game Stardew Valley, for farming simulation fans, was created by a single developer and sold over 3.5 million copies.10
SMEs can cultivate and engage fans for a low cost using social media and other Internet forum websites, such as Reddit. Monetizing fan engagement has been successful in certain creative industries, including e-sports, which emerged from the leisurely world of video games to have a projected fan base of nearly 900 million by 2020.11
Alongside strategies of fan engagement, SMEs in creative industries can now market directly to consumers. By selling directly to buyers, they cut costs and build a personal relationship with consumers.12 Digital-first boutique brands have made headway in markets such as men’s shaving products, mattresses, eyewear, cosmetics, and apparel.13
While these examples are largely physical goods, SMEs engaged in creative services can use direct-to-consumer strategies as well, especially in marketing. For example, creating a mobile app allows SMEs to be visible to customers at all times, create a direct marketing channel, and build brand and recognition.14
Creative industries encompass a wide range of businesses, employing 3.5 million people in the U.S. alone. Embracing digital technologies, focusing on fan engagement, and shifting toward direct-to-consumer marketing strategies are some of the ways U.S. SMEs are addressing growth trends in the international trade of creative goods and services.
Philip Mavrikis is a business technology writer based in Troy, NY, whose work focuses primarily on financial services technology.
1. “Creative Economy Outlook,” United Nations Conference on Trade and Development (UNCTAD); https://unctad.org/en/PublicationsLibrary/ditcted2018d3_en.pdf
2. “The Creative Industries In the United States,” Americans for the Arts; https://www.americansforthearts.org/sites/default/files/pdf/2017/by_program/reports_and_data/creative/2017_UnitedStates_NationalOnePager_Color.pdf
3. “The American Motion Picture and Television Industry: Creating Jobs, Trading Around the World,” Motion Picture Association of America Inc. (MPAA); https://www.mpaa.org/wp-content/uploads/2018/03/MPAA-Industry-Economic-ContributionFactsheet_2016-FINAL-2.pdf
4. “Perspectives from the Global Entertainment and Media Outlook 2018-2022,” PwC. https://www.pwc.dk/da/presse/2018/pwc-outlook18.pdf
5. “It’s never been a better time for SMEs due to digital transformation,” Beat Buhlmann, ITProPortal; https://www.itproportal.com/features/its-never-been-a-better-time-for-smes-due-to-digital-transformation/
6. “The Convergence of Convergence: Examples of Digital, Media, Video, Technology and Industry Converging in the 21st Century,” Christy Roland; https://shape.att.com/blog/examples-of-convergence
7. “Creative Disruption: The impact of emerging technologies on the creative economy,” World Economic Forum; http://www3.weforum.org/docs/39655_CREATIVE-DISRUPTION.pdf
8. “How Much Does Augmented Reality App Development Cost in 2018?,” Tecsynt Solutons, Medium; https://medium.com/@tecsynt/how-much-does-augmented-reality-app-development-cost-in-2018-712d0441e829
9. “Perspectives from the Global Entertainment and Media Outlook 2018-2022,” PwC.
10. “SuperData: Stardew Valley is an indie success with over 3.5 million copies sold,” Stephanie Chan; https://venturebeat.com/2018/01/19/superdata-stardew-valley-is-an-indie-success-with-over-3-5-million-copies-sold/
11. “Video Gaming Levels Up Into a Sport,” Bob Woods, strategy+business; https://www.strategy-business.com/article/Video-Gaming-Levels-Up-into-a-Sport?gko=d0a6c
12. “3 Tips For A More Effective Direct To Consumer Marketing Campaign,” Ryan Parker; https://www.parkerwhite.com/insights/direct-consumer-marketing-campaign/
13. “Perspectives from the Global Entertainment and Media Outlook 2018-2022,” PwC.