Written evidence submitted by UK Research and Innovation

Digital, Culture, Media & Sport Committee’s ‘Immersive and addictive technologies’ inquiry

1.      UK Research and Innovation (UKRI) is a new body, which works in partnership with universities, research organisations, businesses, charities, and government to create the best possible environment for research and innovation to flourish. We aim to maximise the contribution of each of our component parts, working individually and collectively. We work with our many partners to benefit everyone through knowledge, talent and ideas.

2.      UKRI brings together Innovate UK, the seven Research Councils and Research England. Further information about what we do, and the work of each of our councils can be found on our website.

3. Factors in the success of the UK’s gaming sector in many ways reflect the same underlying strengths in the UK’s creative industries. Much of this is a product of the overlap between creativity and digital technologies. It is the fusion between content production, scientific knowledge and technological expertise that drives innovation, new forms of creative expression and commercial growth. This is well demonstrated by the UK’s world-renowned post-production and VFX industries, which are at record levels of production activity, much of it in the form of overseas investment. A combination of artistic talent, technical skills and production facilities and technological expertise (much of it under-pinned by world class Higher Education Institutes) has meant that the UK is a world leader in audio-visual production across film, television, animation, interactive media and games.

4. The UK is already a world leader when it comes to immersive technologies such as virtual reality (VR), augmented reality (AR) and mixed reality. The 2018 ‘The immersive economy in the UK’ report[1] found that there are just over 1,000 ‘immersive specialist’ companies in the UK generating more than 50% of their turnover from immersive products and services. It estimates that these companies employ around 4,500 people and generate a turnover of £660 million, potentially representing as much as 9% of the global market share. These companies are operating and creating value across sectors, within and beyond the creative industries.

5. However, the advent of immersive technologies and the scope for creating VR, AR, Mixed Reality and haptic environments for film, videogames and other entertainment provide the entertainment and creative industries with particular opportunities and challenges. These technologies have the potential to transform not only the audience experience but also the creative and production process – for instance compressing the pre-visualisation, shooting and post-production stages of filmmaking, liberating directors, actors and storytellers in how they realise their creative visions. There are also substantial commercial opportunities and fast-growing markets for new immersive experience – in arts, media and entertainment, but also in education, retail and other sectors. New devices and developer kits from the likes of Sony, Facebook and Samsung are driving global demand and it has been forecast that by 2021, the consumer VR content market will be worth $5 billion[2] but that ultimately the market for Augmented Reality will far outstrip that for headset confined VR.

6. The Government’s Industrial Strategy recognises the potentially disruptive challenge of immersive technologies. Working with the Creative Industries Council and other bodies, it has developed two programmes which work to ensure that the UK’s world-leading creative industries and research communities can harness the potential of immersive technologies to create new content and experiences to entertain global audiences. The Audience of the Future Challenge supports business-led R&D in immersive technologies, while the Creative Industries Clusters Programme supports innovation led by the university research community across the creative economy, including in the immersive sector. Both programmes are funded through the Industrial Strategy Challenge Fund (ISCF), which is led and managed by UK Research and Innovation. Together they represent over £120m of public and industry investment, probably the largest single public R&D investment ever made in the UK’s creative industries and are at the heart of the Creative Industries Sector Deal published in 2018[3].

7. The £45m[4] Audience of the Future challenge encompasses the following elements:

1. Large-scale Demonstrator projects, announced in January 2019[5], which will develop and test with the public new forms of interactive experience in the fields of Performance, Visitor Experience, Sports Entertainment and Moving Image with the aim of significantly advancing the state of the art creatively, technologically and commercially and testing experiences with public audiences of more than 100,000 people. Project Partners include high-growth SMEs who are leading the innovation; globally recognised UK creative and cultural organisations, from the The Royal Shakespeare Company to Sky, The Natural History Museum and Pearson; international technology partners from Magic Leap to Intel and Epic/Unreal; and creative technology research groups from leading UK Universities.  

2. A new National Centre for Immersive Storytelling delivered by the National Film and Television School, Royal Holloway University of London and industry partners to deliver talent development and skills programmes in immersive content creation, technologies and support experimental productions to ensure that the UK’s screen industries translate their world class skills into immersive content.

3. A £10m collaborative R&D programme to boost business-led innovation to make immersive content production cheaper, more efficient and more accessible to ensure the UK becomes a global centre for immersive production.

4. A co-investment programme with the private sector to support the growth of early-stage immersive companies, a design programme to encourage the wider creative sector to prototype new products and services that adopt VR, AR and Mixed Reality; and; a series of missions to build up knowledge, access new technologies and develop commercial links between UK and overseas entrepreneurs and researchers.

8. The £80 million Creative Industries Clusters Programme brings together the UK’s creative industries with its world leading research base in the arts and humanities to position the UK at the forefront of the creative economy sector in Europe, encouraging successful creative businesses to stay and grow in the UK. The Programme supports 9 Creative R&D partnerships between universities and businesses in high-performing Creative Industries Clusters across the UK[6].  Each partnership has a significant research programme in immersive technologies and experiences. Immersive R&D across the film, TV, animation, computer game, live performance, heritage and fashion sectors is central to the propositions of InGame (Dundee), Bristol+Bath, Future Screens Northern Ireland, StoryFutures (M4/M40 corridor), Business, Fashion, Textiles and Technology (East London) and Creative Media Lab (York). These partnerships include major industry partners across the creative and digital industries engaged with Immersive technologies, including Codebase, Sony, Endemol/Shine, BBC, Sky, HTC, Pinewood Studios, ASOS, Burberry, Aardman, Holition, Double Negative and some of the UK’s leading computer science, engineering, creative technology and psychology research groups. This is alongside various humanities research groups which have received support through previous UKRI council programmes such as the EPSRC Digital Economy Programme, AHRC’s Knowledge Exchange Hub programme and the Cross Platform Production Tools competition delivered by Innovate UK.

9. Together, the Audience of the Future Challenge and Creative Industries Clusters Programme will help build a globally competitive research and innovation infrastructure for the development and application of immersive technologies, including their social and cultural impact. As such, it will be associated with a substantial evaluation process managed by UKRI which draws on expertise and input from a number of partners. The evaluation framework is currently being designed, and it is intended to provide more than simply an account of outputs and economic outcomes, but rather to generate insights and learnings into how governments and funding agencies can best engage and support the creative and digital industries, and how R&D investment can enable creativity, innovation and business growth to flourish.

10. In addition to these Industrial Strategy programmes, UKRI will continue to invest in underpinning research across its councils. This will include aspects of Human Computer Interaction (HCI) research, relevant areas of software engineering, graphics and visualisation research and novel ways of visualising complex data to better understand and extract value from it in order to maintain a pipeline of future technologies that UK businesses can exploit commercially. There also needs to be research into supporting areas of Information and Communications Technology (ICT), including innovations in graphics processing units (GPU) to improve speeds in graphics processing and 5G technology deployment so that experiences can be shared in a smooth and realistic way as well as research across the Arts and Humanities that explores both the creative application of emerging technologies and the legal, economic and social implications of their adoption.

11. Talent development within the creative research community should also be a priority area to ensure that the UK has the pipeline of young researchers to drive this multidisciplinary sector forwards. One of the priority areas in EPSRC’s call for applications to support Centres for Doctoral Training (CDT) was the need to create skilled people with expertise in both the underlying digital technologies (be that computer science, artificial intelligence, VR and/or AR) and their people-centred applications in areas such as the arts, entertainment, heritage, communication and new media. This has resulted in applications that deliver interdisciplinary training programmes embedding a culture of co-creation in areas where digital technology interfaces with existing, new and emerging creative practices being prioritised, leading to direct partnership and collaboration with industry, technology users and wider stakeholders to deliver agile, responsible and ethical innovation aligned to industry’s needs.

12. UKRI-supported centres such as the Centre for Intelligent Games and Game Intelligence and the Digital Creativity Hub have been undertaking pioneering research into using gaming and immersive technology “intelligently” for social benefit. Despite various challenges, this group has enjoyed success in collaborating effectively with industry. We recommend that the Committee engage with this group to garner further insights across a number of the issues being considered by this inquiry.

13. UK Research & Innovation are aware, from talking to the research and innovation community operating in this sector, that new visualisation techniques to support the analysis of data from e-sports would be beneficial, and should be a priority for investment.

14. The ISCF Audience of the Future challenge has selected sports as one of its demonstrator projects, supporting a partnership between ESL Ltd, the world’s largest eSports company, York University’s Digital Creativity Lab and creative SMEs Dock10, Cybula, Focal Point VR and Rewind to apply a range of immersive technologies to create a new immersive platform for home consumption of eSports, bringing technology and audience insights that will be applicable across the sports entertainment field.  

15. The £8m Weavr project will create cross-reality viewing experiences allowing fans to immerse themselves in high fidelity statistics, visualisations and data-driven stories that give them deep insights into the live match. Enabling them to seamlessly move between virtual and physical viewing, as well as utilise second screens to watch immersive eSports content on the go. The use of AI & data learning to create highly personalised viewing experiences will allow for fully interactive and individualised insights for the audience, which will permit this project to demonstrate insight into how audiences of the future engage in immersive experiences and the pathways to future commercialisation[7]. The project will test these experiences with UK and international audiences in a series of public trials across 2019 and 2020.

16. Gamification refers to the application of game mechanics and principles to non-game contexts. Some of the most common ‘gamification’ strategies, such as rewards, are not exclusive to the games sector; they are in fact user-centred design principles widely utilised by digital apps, in particular by social media. In recent years, games and social media have adopted the practices of the other in making their products both more rewarding and addictive.

17. The key objective for utilising gamification techniques is to influence and ultimately change users’ behaviour, typically by encouraging and promoting ‘good’ social behaviours such as engaging in more regular physical activity, eating more healthily and reducing personal waste. VR has also been used to help treat fears in anxiety disorders. The most widely adopted uses of ‘gamification’ are activity tracking devices, such as Fitbit. While the majority of these devices are rudimentary pedometers, the success of Fitbit comes from its ability to empower users to see their overall health and fitness trends over time, while also allowing the user to compete with their friends. The benefits of this are twofold: firstly, it encourages people to do more physical exercise and be healthier; secondly, it adds economic value to an existing product line. Another example is the use of ‘emoji’-like faces on utility bills to highlight a household’s usage compared to the local average. This has been proven to be highly effective in reducing personal energy consumption – on average, a household uses 2.5% less energy when their bills are presented this way – and is increasingly being adopted by industry. UKRI funded research is also exploring the potential of VR in the treatment of persecutory delusions[8] which can cause negative outcomes such as isolation, depression, disrupted education and employment, and hospital admission.

18. The majority of Innovate UK funded projects developing ‘gamification’ technologies were in either the health (29%) or education (24%) sectors. This mirrors the adoption of these practices in the marketplace. Another significant area was eco-driving (10%), which has since developed into the ‘safer driving’ apps used by insurance companies.

19. ‘Gamification’ does have its limitations. At present, there are no data available to indicate that these technologies are delivering significant long-term behavioural change; these platforms are more likely to be adopted by users who have already changed their behaviour, for example, individuals who are already healthy using activity trackers to better monitor their exercise. Similarly, rewards and incentives are specific and unique to each platform, which naturally limits the impact it could have across a user’s lifestyle.

20. UKRI and its councils require all beneficiaries of its funding support to follow strict ethical guidelines and principles of good research practice as a condition of their funding, to ensure that research is conducted with integrity and transparency. This includes any research and innovation in digital technologies. To this end, and as set out in its Strategic Prospectus, UKRI has been building on the work initiated by the Research Councils to develop a common approach to research culture, by becoming a signatory of the Concordat to Support Research Integrity and will scope a new UK Research and Innovation Ethics Policy and Framework[9].

21. In terms of current practice, councils within UKRI such as the Engineering and Physical Sciences Research Council (EPSRC) operate frameworks for responsible innovation, ensuring that funded activities are aligned with the principles of Responsible Innovation and create value for society in an ethical and responsible way[10]. Similarly, applicants to Innovate UK’s funding competitions are required to explain in their applications what the wider implications of their proposed innovation would be, and the impact the project might have outside the project team. Its assessment guidance is clear on the need for proposals to articulate this in terms of wider societal impacts, and recommends scoring depending upon the quality of response. Although it does not list specific harms, this requirement applies to all technologies, not just digital ones.

22. Innovate UK is doing exploratory work with the British Standards Institution around the possibility of creating a publicly available standard for responsible innovation (RI PAS). This would be designed to be used by businesses in any technology area and any market, and would be expected to include societal harms such as addiction (of both a physical and virtual kind). It builds on its use of a Responsible Innovation Framework which was found to add value when applied to specific competitions across non-digital technology areas (for example, synthetic biology). Whilst not a substitute for regulation, the RI PAS would help innovators appreciate and understand the potential unintended adverse impacts of their proposed innovations, and encourage them to take steps to avoid them.

23. In an age where there is an abundance of easy-to-access creative content, the introduction of in-game spending has revolutionised the games sector. Some creative sectors - such as music and film – have adapted to these new circumstances by lowering the cost of their content; adjusting for inflation, albums are cheaper today than they have ever been. Others have adopted an “all-you-can-eat” type of subscription model (Netflix, Spotify). The games sector, however, due to the interactive nature of its medium, has been able to innovate its revenue model.  The most widely adopted model is to release a game for free and have all its revenue generated from in-game purchases. This model is commonly known as the “freemium” model.

24. Freemium works on a long-tail curve model where the majority of the consumers - estimated at around 90% - do not pay anything, while the remaining 10% are paying varying amounts, with a very small minority - “Superfans” - paying a significant sum. The two key benefits of using this model, as opposed to a blanket flat-fee, is that a business can then both maximise the revenue opportunity from those who are willing to pay, as well as maximising the marketing and branding opportunity, thereby engaging with potential future audiences.

25. Types of in-game spending vary massively, from the introduction of extra levels (Super Mario Run), digital skins (Fortnite, where reportedly 69% of regular players have made in-game purchases) or the removal of advertisements. Another common product is a ‘loot box’. The player is unaware of the content of the loot box until they have made their purchase. The content may vary in ‘value’, and the games company controls the outcome to ensure that the most valuable items are also the rarest. Owing to fears related to gambling, loot boxes are now regulated under gambling laws in China, Japan, Australia, the Netherlands, Belgium and the Isle of Man.

26. A significant number of freemium games use unique in-game currencies that players can buy to redeem specific in-game items. Rather than directly buying an asset, players first buy the in-game currency - for example stars or shells - and use this to buy the desired product. The argument for this methodology is that the player can also generate in-game currency through gameplay. However, one of the consequences of this is that it loosens the connection to real-world currency, and makes it harder for the consumer to recognise how much money each asset is worth. This is particularly significant for children who may not fully understand the value of money, let alone money converted into in-game currency.

27. The introduction of internet-connected games has significantly improved the design and gameplay of games. Developers can better understand their users and their behaviour when playing a game. However, it also allows designers to build better compulsion loops into their games to make them more addictive. If a publisher is working on a freemium model, then it directly benefits them to try and keep the player on the platform for as long as possible. They can also use user data to maximise and target in-game purchases, or vary gameplay to correspond to the likelihood of a consumer making a purchase.  The issue is compounded if the user is playing on a mobile device, which can provide notifications that give the company more opportunities to pull the user back into a game.

28. The freemium model has helped support the UK’s independent games sector to compete with multinational companies on platforms such as Apple’s app store. While in-game purchases are not wholly negative (they can both improve the gameplay of a game and create new revenue opportunities for businesses) further study and investigation should be carried out into some of its more damaging effects. This could include:

1. applying time-sensitive upper limits to in-game purchase, for the minority of players who are paying significate amounts of money on one game;

2. better understanding the gambling element of loot boxes, and how other countries have dealt with the issue;

3. in-game currency, and how it affects children’s appreciation of the value of money; and

4. companies designing targeted ‘compulsion loops’ into their game to keep users on their platforms and making purchases.

29. The Observatory for Responsible Research and Innovation has been set up by EPSRC ICT function and is hosted by Oxford and De Montfort Universities to promote responsible research and innovation across the ICT community, including around the use and storage of data.

30. Despite the central role that Industrial Strategy supported projects will play in driving innovation and growth in immersive technologies over the next few years, they need to be considered as part of a broader policy framework, much of which (for instance tax incentives, regulation and intellectual property) goes beyond the scope of the creative industries. Especially important are education and skills, with the Immersive Economy report identifying skills shortages as the biggest barrier to growth for UK business. Innovation and growth need much more than funding, but also a workforce and pipeline of new talent with expertise across a broad range of technologies and creative disciplines. A key challenge for government, HE and industry will be how R&D investment can be strategically deployed alongside education and skills provision to maximum benefit.

January 2019