We all know companies compete. So do governments, especially in the arena of jobs, especially in the current economy.
Like successful businesses, winning governments develop strategies rooted in a realistic assessment of their community's assets and capabilities -- and a hard-nosed diagnosis of the market. They make long-term investments. They track progress and adjust course as necessary. They stay focused on desired outcomes and results.
Consider the case of New York. Over the last decade, the nation's financial capital has expanded its position as a major center of film and television production -- and increasingly new media technology and content. In the face of national media industry decline, New York has increased jobs in film and TV production more than 20 percent since 2002, to some 130,000, the equivalent of 94,000 full-time positions. Spending has risen almost 70 percent over the same period, to $7.1 billion from $4.2 billion. The media sector as whole employs some 275,000 people in New York and generates more than $80 billion in annual revenues. Media sector jobs average $111,000 in annual salary, 42 percent higher than the citywide average.
A pedestrian encountering the number of productions in process on any given day could easily think, 'twas always thus. It wasn't. A decade ago, filming in New York cost 20 percent more than the alternatives -- mostly north of the border in Canada. Research showed that companies were willing to pay a premium for the advantages the city offered -- verisimilitude, infrastructure, and talented, trained crews key among them. But not a 20 percent premium. That's when the city and state stepped in with a tax credit program, designed with the help of The Boston Consulting Group, to narrow the gap. Not necessarily to zero, but to a spread the typical producer could find acceptable. Film activity took off. Progress was monitored, the program was adjusted in 2005-2006, and the growth kept growing. It was soon joined by private-sector infrastructure investment that expanding studio and post-production capacity. The city moved to cut red tape and make filming easier with on-line permitting, free police on location shoots, and the resources of a single contact point -- the Mayor's Office of Media and Entertainment -- to assist production managers. TV productions grew by more than 80 percent over the last decade.
Building on this model, New York is now working to attract digital economy players to the city, recognizing that maintaining media leadership means positioning the city as a destination for new media as well as old. Again the strategy is based in existing assets and capabilities. New York has a strong cross-disciplinary talent pool and growing digital community. The city government has launched multiple programs to build on its strengths in four key areas: sector promotion, community engagement, talent development, and infrastructure. It is thinking both near- and long-term. It established an incubator program to help digital entrepreneurs find the physical space they need to set up operations quickly. The city donated the land and held an international competition for a new engineering and technology campus that will be built by Cornell and The Technion-Israel Institute of Technology, a smart investment in developing a future talent pool in the sectors that are driving job growth.
The early results are encouraging. The digital sector now employs some 25,000 people and accounts for more than $8 billion in annual revenues. Major tech giants have opened engineering as well as advertising and sales offices, including Google in 2007, Twitter and eBay in 2011, and Facebook 2012. Silicon Alley is reported to be home to more than 500 start-ups. Venture capital is flowing -- New York City received 24 percent of all U.S. media and entertainment venture capital investments in 2011, up from 10 percent in 2002.
Estimates show that in the United Sates, the multiplier effect for high-tech positions is three times that for jobs in traditional manufacturing. As digital media companies, big and small, develop a sizeable "cluster" in New York, the city becomes even more attractive to the next digital entrepreneur looking for that powerful combination of talent and infrastructure. This momentum will help both the city and the burgeoning new media industry reprise the success of film and TV production in New York's digital economy.
Tim Nolan and Kate Sayre and partners and managing directors in the New York office of The Boston Consulting Group.
Start your workday the right way with the news that matters most. Learn more