This article was first published in the November/December 2016 Ireland edition of Accounting and Business magazine

These are heady days for the Irish film industry. Brooklyn, partly filmed in Ireland and based on the novel by Colm Tóibín, was nominated for three Oscars last year. The next Star Wars release has been filmed on the Kerry island of Skellig Michael and in Malin Head in Donegal. Game of Thrones, shot in Northern Ireland, has won more Emmys than any other TV programme in history. And The Fall, set in Belfast, has become a surprise TV hit.

In both Northern Ireland and the Republic, film has become an important part of the economy. The broader industry – known as the audio-visual content production sector, which includes TV and online output, as well as cinema – employs more than 6,000 people in the Republic, engaging 560 businesses and generating turnover of over €550m annually.

A 2011 Irish government study, Creative Capital, set out the objective of doubling the size of the industry, while the 2015 Action Plan for Jobs recognised the sector as one of the most promising for employment creation. Its short-term target was for an additional 1,000 jobs in audio-visual.

Rapid growth is also taking place in the sector in Northern Ireland, where it is worth more than £65m a year to the province’s economy. In the UK as a whole, annual turnover is around £6.6bn, which is projected to rise to £7.6bn in the next two years. Employment growth is expected to increase by between 13% and 17% a year. The multiplicity of TV and online channels, plus the renewed popularity of cinema-going, is driving growth in Ireland, the UK, Europe and internationally.

However, this growth can only happen at this rate if there are more studios. A 2012 report by PwC for Pinewood Studios reported total stage floor space in the UK of 120,000 sq metres, with a potential additional demand of between 74,300 sq metres and 112,900 sq metres by 2032. Extra ancillary space will also be required, as well as facilities for businesses servicing film productions.

The situation in Ireland is the same, on both sides of the border, with demand leading to new studios opening and existing studios being expanded and modernised. The Ardmore studios in Bray are majority owned by show business accountant Ossie Kilkenny and U2 manager Paul McGuinness. Ardmore is well established and well known, supporting local economic activity of €35m a year, but the studios are turning productions away because of the high level of demand.

Ashford studios in County Wicklow are newer – they opened in 2012 – but are also at full capacity. The other major commercial studios in the Republic are at Limerick, based at the former site of the Dell factory and are not yet operational, but will be the largest of the three when opened. They are expected to generate €70m a year in local spend.

As well as this, Dublin’s South Docklands could be the setting for another new studio, on the former Irish Glass Bottle site. This project is being led by Brooklyn producer Alan Maloney and Windmill Lane Studios founder James Morris, reportedly with backing from U2 frontman Bono. This one scheme is projected to create more than 3,000 jobs, with a studio significantly larger than any of its rivals, and more than twice the size of those in Limerick.

In Northern Ireland, Belfast’s Titanic Studios are in high demand and were the base for the filming of Game of Thrones. Over the first six series, Game of Thrones became the world’s most watched TV show, with more than 18 million viewers in 199 countries. The programme has generated international interest in Northern Ireland’s scenery, with much of the shooting taking place outdoors on the province’s beaches, mountains and famed Dark Hedges road.

Although filming will complete in 2018, it is likely that other books from author George RR Martin may also be filmed in Belfast. Over the course of the first six Game of Thrones series, some £146m of economic activity was generated for the local economy, with 900 full-time and 5,700 part-time jobs created.

Additional capacity is provided in Belfast by the Linen Mill Studios, while a major new development, the Belfast Harbour Studios, will open later this year. The Harbour Studios will be a central part of a ‘Cleantech Hub’ for high-tech businesses at the North Foreshore in Belfast.

Studio capacity expansion in and around Belfast has been supported by Northern Ireland Screen, a government-supported agency promoting the film industry. CEO Richard Williams says: ‘It is well known within the global screen industry that the demand for studio space currently outstrips supply in the UK.

‘We are delighted that the proposed new sound stages on the North Foreshore are going ahead and with our recent successful track record in attracting large-scale film and television production to Northern Ireland, we remain convinced that more screen production will be forthcoming once the infrastructure becomes available.’

Dr Colm Murphy of Ulster University led a research project, the Honeycomb Creative Works programme, examining the state of the industry on the island of Ireland. ‘In terms of studio capacity, within a 20-mile radius of Belfast by the end of this year there should be seven sound stages,’ he explains. ‘That would be the heaviest concentration in Europe. That should provide an enormous extra capacity. A lot of that will replace the use of warehouses and so on. The Fall was filmed in a converted warehouse, which was not ideal.

‘Quite a lot of old factories are being used at the moment in the greater Dublin area,’ he adds. ‘Those spaces are coming back under pressure with economic growth, so they may be used for housing or their original purpose of warehousing or manufacturing. Production companies would much prefer to be in purpose-built facilities.’

It is not just the need to increase capacity that is driving the construction of new studios. Murphy says producers want very modern infrastructure. ‘The biggest production cost is energy, particularly lighting – 80% of cost will be lighting. Modern studios mean lower costs.’

Ireland is also benefiting from the clustering effect – the more studios there are and the more films they attract, the stronger the skills base and the local business support sector. These, in turn, are being reinforced and renewed through the specialist support of some schools.

‘Northern Ireland has a competitive advantage because 43 secondary schools are teaching moving arts, the highest concentration in Europe,’ says Murphy. ‘So that feeds into the next layer in colleges and universities. From a very early age, [pupils] have an interest in the area and that feeds through at college and university. This helps to produce young people in the sector.’

With Dublin and Belfast just a relatively short drive apart, the two cities are supporting each other. ‘There are a lot of skills going both ways,’ explains Murphy. ‘It is only two hours between Belfast and Dublin, which is nothing in terms of the film industry in Europe. At the moment it is very balanced between the two locations, but if the UK in the future does not see it as a key industry then you could see a gap opening up between the two.’

Murphy believes that the approach of the UK and Northern Ireland administrations as they head towards Brexit will be crucial in determining the health of the industry in the North. The risk is that the sector may become marginalised and seen, post-Brexit, as less important than manufacturing industries. However, the big consumption markets for film and TV – the largest is the United States and the second largest is Asia – will be targets for UK exports after leaving the EU.

One of the big strengths of the film industry, as far as governments are concerned, is the high level of spin-off benefits. The Creative Capital report suggests that 18% of visitors to Ireland are here because they have seen the island on TV or at the cinema. That effect has been particularly noticeable with Game of Thrones, which has generated its own mini-industry of guided tours in and around County Antrim. The film sector also has a very high multiplier effect because of its high use of freelancers.

According to analysis by IBEC, one-and-a-quarter jobs are indirectly supported for every person directly employed in the industry. Even better, substantial numbers of the people working in the industry are well paid – with average pay around €37,500.

In part because of this array of benefits to the wider economy, both jurisdictions provide a range of financial incentives. The Section 481 tax credit provides incentives to promote film and TV production in the Republic. This is now worth 32% of eligible expenditure in Ireland, which rose from 28% last year. Eligibility criteria were broadened last year and the system made more flexible.

Financial incentives in the North are generous for children’s programming, in particular. Since April 2015, a children’s television tax relief has been available in Northern Ireland and the rest of the UK. These apply to animation and high-end children’s TV programming, at a rate of 25% on enhanceable expenditure.

‘That is phenomenal,’ says Murphy. ‘The Northern Irish animation market has really been bolstered from a very low base because of the very generous financial incentives.’

Deloitte reports that creative industries’ tax reliefs have been responsible for attracting £1.5bn of overseas investment into the UK, with every pound of film tax relief generating £12.49 of economic activity.

The complexity of film financing means that recruiting excellent finance professionals is of crucial importance to production companies. ‘Accountants are important for a number of reasons,’ explains Murphy.

‘The people who tend to be running these companies are creatives, so finance is not always their core area. So they rely very heavily on accountants who understand those realities and can raise funds for them and that raises credibility for them.

‘In the South they are better at co-productions, drawing in finance from five, six or seven different financiers. You do need some very talented accountants to bring them in and then make sure everyone is paid what they are supposed to be paid. It is very sophisticated in the South – much more sophisticated than in the North, which tends to be much more straightforward.’

Accountancy, then, sits at the heart of one of the most technologically developed and fast-moving industries. It is a sector that seems set to grow much larger and which is likely to play an ever more important role in the Irish economy.

Paul Gosling, journalist