rewrite this content and keep HTML tags The independent UK film sector is at “crisis” point according to research from the British Screen Forum th
rewrite this content and keep HTML tags
The independent UK film sector is at “crisis” point according to research from the British Screen Forum that examines trends in film finance over a 10-year period, with investment in local film production falling miserably behind local high-end TV (HETV).
The ‘Show me the money’ report was conducted by analyst Ben Keen for the decade ending 2023, and prior to the UK government announcing the UK Independent Film Tax Credit (IFTC) in March 2024. It draws on analysis of BFI certification data for tax break claims and consultation with the industry.
The report suggests five key interventions to help revive the sector. They are: the development of ‘media management’ skills; fostering corporate partnerships for diversification; increased private equity investment; and enhancing the quality of and access to film finance data.
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Scroll down to read the recommendations in more detail
Over the 2014-2022 period, 1,631 people were credited as a first producer, according to the BFI’s records, but only 10% of these producers have gone on to make more than one film; 51% of these 169 producers were only able to make one more film after the first; and a further 41% have made just three films.
Only 10 producers have succeeded in making five or more local UK films since 2014. (Local refers to a project made by a UK production company without being substantially financed and controlled from outside the UK.)
Total spending across film and high-end TV rose to an all-time peak of £9.7bn in 2022. However, this fell to £5.8bn in the Hollywood strike-impacted year of 2023, a drop of 40%.
“This decline was even more extreme than the 23% recorded in 2020, when Covid hit hardest, and effectively wiped out the post-pandemic recovery that the industry has enjoyed in 2021 and 2022,” said the report.
For the UK’s local lilm production specifically, investment fell to its lowest ever level in 2023 of £160m. Meanwhile, local HETV production attracted five times more investment (£812m). The peak year for domestic film investment was 2016 when £405.5m was spent – only 10% less than the total invested in HETV that year.
It’s not only local film production that is coming under pressure – total inward investment in UK film production fell by 46% in 2023. This equates to a £1.4bn fall in the total sum injected into the sector by international players, compared to 2022.
The annual number of UK-qualifying productions financed by legacy US-based studios peaked at 30 in 2017. Since then, the studios’ production activity has fallen and appears to have levelled out at less than half the peak annual output recorded in 2017.
Despite this, 2023 was the first time in which the total volume of films made with inward investment, combined with those made under official co-production agreements, exceeded local-only production. Historically, the volume of locally funded films produced in the UK has always exceeded the number financed from outside the UK, albeit at far lower average budgets. The average budget for a film financed through inward investment in 2021-23 was £26.4m – 18 times higher than the average of £1.5m from the UK alone.
“Given the impact of the strikes on inward investment production [in 2023], this result is all the more remarkable – and concerning,” noted the report.
Funding avenues
Only 10 local films have broken the £25m budget level since 2014 (privileged access to BFI data on tax relief for this report means those productions can’t be named). The report indicates it has become harder and harder to put together budgets of more than £10m – a level considered critical for commercial viability.
Over the four years to 2022, Netflix, was involved in the financing of more UK films than Warner Bros, Disney and Universal combined, while Netflix, Amazon and Apple were involved in the financing of more productions over those four years than the six legacy Hollywood groups (Disney, Warner Bros, Universal, Sony Pictures, Paramount and MGM) combined.
The major US studios, however, still invest significantly more in terms of typical budget allocated to one movie. The average budget of a major US studio film shot in the UK in 2022 was £139m, more than double the £54m average budget of a streamer-backed UK film in the same year.
While the number of Hollywood movies shot at UK studios has been falling, the average spend on those films has generally been rising. The average budget for UK productions backed by streamers also tends to be more flexible than studios, operating in the lower £1m-£10m bracket.
The average investment for a single US major studio-backed UK film in 2022 was equivalent to 75% of the spend on all 100 local productions shot that year.
The demise of Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEISS) following the introduction of more restrictive rules in 2018, to include a ‘risk to capital’ funding test, has cut off further routes to film investment. The schemes no longer allow investment in individual films; however, investments in company shares are deemed to meet the ‘risk to capital’ test.
The number of UK film productions with money from specialist investment companies peaked in 2017 and fell by 60% the following year after the EIS changes came in. Specialist film financiers still active in the market, such as Head Gear Films and Ingenious Media, mostly now offer forms of loan finance rather than the equity investments that UK film producers are calling for, with financiers asking for bigger percentages in return for their investment.
Ingenious Media alone claims to have raised around £9bn, which has been invested in over 1,000 films including significant equity positions. However, since 2018, Ingenious has not raised any new money for film investment and existing funds have been largely spent. Through 2022, Ingenious was still putting money into about 30 films a year, but mostly in the form of debt rather than equity, cash-flowing the tax credit or what other investors might put in.
Like Ingenious, Great Point Media had invested all its EIS funds by 2022 and was forced to seek new finance from outside the UK, raising $100m from a US credit fund. Following the death in February of founder Jim Reeve, Great Point went into administration in March 2024, which the report suggested has further dented general UK investor confidence in the production sector. Investment firm Calculus Capital, which has backed Jude Law’s Riff Raff Entertainment with EIS investment, took over the £60m film and TV production finance business in July.
Under the old EIS regime, specialist film financiers concentrated their funding on local productions, whereas over the last few years a number have switched focus to investing in more projects controlled from outside the UK alongside international players which are perceived to pose less commercial risk, and with bigger budgets.
The collapse in equity investment available from UK specialist financiers has pushed some UK producers to seek funding from US sources instead. However, the report noted several interviewees warned this can be problematic.
“We like to put together all our financing and not go to a one-stop solution like the ‘smoke and mirrors’ of a US producer-financier who says, ‘Come to me and I’ll greenlight your film’ and then, behind the scenes, is really going and getting other people’s money or passing of the risk and, in the meantime, they’re taking half your fees and back-end,” said one UK producer.
The pre-sales market has also faltered. For those still able to use it, its success is clear – the report noted the average budget of the films employing it has consistently been three times higher than those productions without a sales company involved in the financing plan.
However, it is dwindling. Up to 2016, the number of local UK films made with a sales company attached was roughly the same as the volume produced without the involvement of a sales agent. The number of projects with sales company participation was just 29 in 2022, compared to 154 in 2015.
“Being a standalone sales company is a lousy business now,” said one exec at a UK film and TV production company, “because all the margins are capped – even on a successful film. The sales company model isn’t underpinning the financing of our films.”
The decline in pre-sales can be attributed to Covid exacerbating the struggling cinema market; a reduction in the number of independent distributors globally willing to take financial risks on projects; escalating costs that result in a growing disparity between the minimum guarantees international distributors are willing to pay compared to the sums required to make a budget work; fierce competition for talent; and streamers taking all global rights.
Crowd-financing has not emerged as a viable source of film investment, the report found. The number of productions with some form of crowd-funding platform backing peaked at 27 in 2014, but interest in such schemes has dwindled. The majority of films made with some element of crowd-funding have been in the micro-budget sub-£250k range.
Public pressure
The combined sum of £35m earmarked for film investment by public service broadcasters has come under massive pressure in recent years, with budgets driven up by escalating costs of talent and crew in front and behind the camera. An inflation of around 25% was noted in the 2021-2023 period.
The report noted the key role the public service broadcasters play in development. Film4 and BBC Film allocate £4m-£7m a year to development between them. At any one time, Film4 and BBC Film each have around 120 projects being actively developed. However, there is a concern the funders don’t feel the full benefit of this development.
“The scale of public service broadcaster investment in development fulfils a key talent incubation role that most other market players do not match but ultimately benefit from,” noted the report.
From 2019-2022, BBC Film backed more than double the total number of films financed by all other public service broadcasters combined, even though Film4 had an annual film investment fund of about £25m in this period (which dropped to £18m in 2024), more than twice the £11m annual budget that BBC Film spends on films. Film4 prioritises fewer, but bigger budget, features, working with filmmakers such as Yorgos Lanthimos and Jonathan Glazer.
On average, according to the report, the public service broadcasters contribute 17% of the total budgets of projects.
Public service broadcaster (PSB) annual investment in UK-originated drama is far higher than what is allocated to producing new films – £340m versus £24m in 2022. However, this film investment translates into an average spend of about £1m per hour – not far off the equivalent public service broadcaster average spend per hour on high-end drama.
The PSBs have also been hit with a potential devaluing of their TV screening rights when partnering with global streamers, the report discovered. Previously, UK broadcasters could enter into co-financing deals with major US studios, safe in the knowledge they would not be competing for UK TV viewers. Once the US studios opened up their own streaming services, this changed, with the US studios now also looking for a first UK streaming window, ahead of a traditional linear UK transmission.
Apple, Amazon and Netflix are understood to be firmer in requiring an exclusive first window after any (often limited for awards qualification) cinema exposure – even when there is co-investment from a broadcaster.
For broadcasters, this could have more existential implications, said the report.
“Whilst other release windows have generally become shorter over the last decade, the ‘free TV’ window has been under increasing pressure,” explained the report. “It has typically been pushed back from 12 months to 24 months and sometimes even 36 months. Consequently, broadcaster executives are inevitably questioning the value proposition of their film investments when their own TV audiences must wait so long to see the projects they have backed.”
The number of projects with public agency investment – the BFI, Screen Scotland, Northern Ireland Screen Fund and Ffilm Cymru – going into production reached a peak of 29 in 2020, almost three times the number going in front of the cameras back in 2016. This echoes the BFI’s changing strategy – in 2017 it refocused its investment strategy to support less experienced, move diverse voices, but at lower budget levels.
In 2022/23 the BFI Film Fund annual budget was around £25m, which dropped to £18m per year under its revised strategy as the BFI Filmmaking Fund from April 2023. The BFI’s 2023 strategy also carved out the ‘impact’ fund for more experienced directors, whose films are budgeted over £3.5m. Over the entire 2014-2022 period, 65 percent of films backed by public money have had budgets under £1m.
End of ‘streaming wars’
As well as controversies around theatrical releases and TV windows, for producers, streamers’ production investment has come with insistence on buying out all rights from the producer, thereby removing the potential of generating any further ‘back-end’ revenue.
Another impact of the streamers entering the UK market has been the inflation of budget costs. One UK producer told the report: “As soon as you get a streamer on board, everyone involved doubles their costs and you know, it’s at least 50% more expensive with a streamer on board, if not double.”
Post-pandemic, all the streamers have been re-evaluating their overall content spending plans and the role of UK film within their investment strategies is constantly evolving.
The Hollywood majors are now focusing on profitability, forcing them to rethink their streaming strategies, as investors lament rising interest rates. “This effectively means that this phase of the so-called ‘streaming wars’ is over,” said the report.
Content budgets have been cut by most of the legacy companies, although investment by Netflix, Apple and Amazon have held up or even been increased. But the extent to which this trio will commit to spending on UK production over the longer term is still not clear.
HETV speeds ahead
While local film production slumped to its lowest-ever levels in strike-addled 2023, local HETV production stands out as the only category of production that attracted more investment in 2023 than in previous years, with a 25% bump. Local HETV attracted five times more investment than film, of £812m versus £160m. The report posited that “homegrown TV production was relatively impervious to the negative factors affecting all of the film side of the business as well as international investment in British TV production (which fell by 49 percent)”.
Owing to the broadcaster commissioning process and terms of trade historically negotiated by trade body Pact, the business model for independent TV production is perceived as less risky, with more consistent commercial upside than film production.
Since 2014, there have been a little over 2,000 companies active in film and/or high-end TV production. Only 2.4% of these (48 firms) have been active in both. Of these, 73% started with film production before moving into TV. Over the last three years, these diversified production companies have made nearly twice as many TV shows as film projects.
Recommendations
The report made five recommendations for reviving the UK independent screen sector. They are:
1. ‘Media management’ skills development
“It is apparent that there is a dearth of people in the film production sector with the entrepreneurial vision and management skills required to scale production companies able to compete successfully in the global market. To address this, it is recommended that film schools, universities, and other industry training bodies develop more extensive MBA-style programmes to better equip new generations with the full range of business skills and acumen.”
2. Fostering corporate partnerships for diversification
“Looking towards the UK’s successful tech start-up sector may offer inspiration for schemes to encourage and stimulate partnership and innovation. Established mechanisms like ‘accelerator programmes’ and match-making initiatives can foster effective collaboration between start-ups, scale-ups, more established corporates, and investors. These can lead to a range of partnerships, joint ventures, and sometimes result in formal mergers and acquisitions.”
Read more about such a scheme, UK producers Andy Paterson and Annalise Davis’ partnership with virtual production technology specialists Dimension Studios and the Vue cinema chain here.
3. Private equity investment
“Double down on encouraging investment in the equity of production groups. For relatively early-stage companies (within seven years of their first commercial trading), such investments can be carried out via the government’s EIS and/or VCT (Venture Capital Trust) schemes that offer tax relief to investors.
“It is also suggested that government initiate a full review of the EIS regime for film and TV in the post 2018 Finance Act period. The objective of this would be to ascertain whether any tweaks to the rules could counter the exodus of private investors from the sector seen since then.”
Read more about the EIS scheme here.
4. Creating mechanisms for ongoing investment in UK talent
“Efforts are made to devise schemes to facilitate investment in the ongoing careers of our most talented writers, directors, and actors. Any such mechanisms must tackle the thorny topic of the most successful talent being snatched up by well-funded international groups after their early careers have been nurtured by domestic players.
“Within the public agency sector, it may be possible to formulate some kind of ‘first look’ provision that makes investment in first-time filmmaker projects contingent on having the option to invest in an agreed number of their future projects.”
5. Enhanced film finance data
“There is an opportunity to use the application process for the new [UK tax credit] Audio-Visual Expenditure Credit (AVEC) as a mechanism to gather additional detailed information on financing sources for film and HETV. Without making the submission procedure too onerous, it would be possible to aggregate and make available extremely valuable data on the dynamics of UK film and TV financing that has never been revealed before – and all without compromising the confidentiality of information about individual projects. The significant financial rewards available via the AVEC scheme should provide sufficient incentive for participants to share their data in a secure manner.”
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The independent UK film sector is at “crisis” point according to research from the British Screen Forum that examines trends in film finance over a 10-year period, with investment in local film production falling miserably behind local high-end TV (HETV).
The ‘Show me the money’ report was conducted by analyst Ben Keen for the decade ending 2023, and prior to the UK government announcing the UK Independent Film Tax Credit (IFTC) in March 2024. It draws on analysis of BFI certification data for tax break claims and consultation with the industry.
The report suggests five key interventions to help revive the sector. They are: the development of ‘media management’ skills; fostering corporate partnerships for diversification; increased private equity investment; and enhancing the quality of and access to film finance data.
-
Scroll down to read the recommendations in more detail
Over the 2014-2022 period, 1,631 people were credited as a first producer, according to the BFI’s records, but only 10% of these producers have gone on to make more than one film; 51% of these 169 producers were only able to make one more film after the first; and a further 41% have made just three films.
Only 10 producers have succeeded in making five or more local UK films since 2014. (Local refers to a project made by a UK production company without being substantially financed and controlled from outside the UK.)
Total spending across film and high-end TV rose to an all-time peak of £9.7bn in 2022. However, this fell to £5.8bn in the Hollywood strike-impacted year of 2023, a drop of 40%.
“This decline was even more extreme than the 23% recorded in 2020, when Covid hit hardest, and effectively wiped out the post-pandemic recovery that the industry has enjoyed in 2021 and 2022,” said the report.
For the UK’s local lilm production specifically, investment fell to its lowest ever level in 2023 of £160m. Meanwhile, local HETV production attracted five times more investment (£812m). The peak year for domestic film investment was 2016 when £405.5m was spent – only 10% less than the total invested in HETV that year.
It’s not only local film production that is coming under pressure – total inward investment in UK film production fell by 46% in 2023. This equates to a £1.4bn fall in the total sum injected into the sector by international players, compared to 2022.
The annual number of UK-qualifying productions financed by legacy US-based studios peaked at 30 in 2017. Since then, the studios’ production activity has fallen and appears to have levelled out at less than half the peak annual output recorded in 2017.
Despite this, 2023 was the first time in which the total volume of films made with inward investment, combined with those made under official co-production agreements, exceeded local-only production. Historically, the volume of locally funded films produced in the UK has always exceeded the number financed from outside the UK, albeit at far lower average budgets. The average budget for a film financed through inward investment in 2021-23 was £26.4m – 18 times higher than the average of £1.5m from the UK alone.
“Given the impact of the strikes on inward investment production [in 2023], this result is all the more remarkable – and concerning,” noted the report.
Funding avenues
Only 10 local films have broken the £25m budget level since 2014 (privileged access to BFI data on tax relief for this report means those productions can’t be named). The report indicates it has become harder and harder to put together budgets of more than £10m – a level considered critical for commercial viability.
Over the four years to 2022, Netflix, was involved in the financing of more UK films than Warner Bros, Disney and Universal combined, while Netflix, Amazon and Apple were involved in the financing of more productions over those four years than the six legacy Hollywood groups (Disney, Warner Bros, Universal, Sony Pictures, Paramount and MGM) combined.
The major US studios, however, still invest significantly more in terms of typical budget allocated to one movie. The average budget of a major US studio film shot in the UK in 2022 was £139m, more than double the £54m average budget of a streamer-backed UK film in the same year.
While the number of Hollywood movies shot at UK studios has been falling, the average spend on those films has generally been rising. The average budget for UK productions backed by streamers also tends to be more flexible than studios, operating in the lower £1m-£10m bracket.
The average investment for a single US major studio-backed UK film in 2022 was equivalent to 75% of the spend on all 100 local productions shot that year.
The demise of Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEISS) following the introduction of more restrictive rules in 2018, to include a ‘risk to capital’ funding test, has cut off further routes to film investment. The schemes no longer allow investment in individual films; however, investments in company shares are deemed to meet the ‘risk to capital’ test.
The number of UK film productions with money from specialist investment companies peaked in 2017 and fell by 60% the following year after the EIS changes came in. Specialist film financiers still active in the market, such as Head Gear Films and Ingenious Media, mostly now offer forms of loan finance rather than the equity investments that UK film producers are calling for, with financiers asking for bigger percentages in return for their investment.
Ingenious Media alone claims to have raised around £9bn, which has been invested in over 1,000 films including significant equity positions. However, since 2018, Ingenious has not raised any new money for film investment and existing funds have been largely spent. Through 2022, Ingenious was still putting money into about 30 films a year, but mostly in the form of debt rather than equity, cash-flowing the tax credit or what other investors might put in.
Like Ingenious, Great Point Media had invested all its EIS funds by 2022 and was forced to seek new finance from outside the UK, raising $100m from a US credit fund. Following the death in February of founder Jim Reeve, Great Point went into administration in March 2024, which the report suggested has further dented general UK investor confidence in the production sector. Investment firm Calculus Capital, which has backed Jude Law’s Riff Raff Entertainment with EIS investment, took over the £60m film and TV production finance business in July.
Under the old EIS regime, specialist film financiers concentrated their funding on local productions, whereas over the last few years a number have switched focus to investing in more projects controlled from outside the UK alongside international players which are perceived to pose less commercial risk, and with bigger budgets.
The collapse in equity investment available from UK specialist financiers has pushed some UK producers to seek funding from US sources instead. However, the report noted several interviewees warned this can be problematic.
“We like to put together all our financing and not go to a one-stop solution like the ‘smoke and mirrors’ of a US producer-financier who says, ‘Come to me and I’ll greenlight your film’ and then, behind the scenes, is really going and getting other people’s money or passing of the risk and, in the meantime, they’re taking half your fees and back-end,” said one UK producer.
The pre-sales market has also faltered. For those still able to use it, its success is clear – the report noted the average budget of the films employing it has consistently been three times higher than those productions without a sales company involved in the financing plan.
However, it is dwindling. Up to 2016, the number of local UK films made with a sales company attached was roughly the same as the volume produced without the involvement of a sales agent. The number of projects with sales company participation was just 29 in 2022, compared to 154 in 2015.
“Being a standalone sales company is a lousy business now,” said one exec at a UK film and TV production company, “because all the margins are capped – even on a successful film. The sales company model isn’t underpinning the financing of our films.”
The decline in pre-sales can be attributed to Covid exacerbating the struggling cinema market; a reduction in the number of independent distributors globally willing to take financial risks on projects; escalating costs that result in a growing disparity between the minimum guarantees international distributors are willing to pay compared to the sums required to make a budget work; fierce competition for talent; and streamers taking all global rights.
Crowd-financing has not emerged as a viable source of film investment, the report found. The number of productions with some form of crowd-funding platform backing peaked at 27 in 2014, but interest in such schemes has dwindled. The majority of films made with some element of crowd-funding have been in the micro-budget sub-£250k range.
Public pressure
The combined sum of £35m earmarked for film investment by public service broadcasters has come under massive pressure in recent years, with budgets driven up by escalating costs of talent and crew in front and behind the camera. An inflation of around 25% was noted in the 2021-2023 period.
The report noted the key role the public service broadcasters play in development. Film4 and BBC Film allocate £4m-£7m a year to development between them. At any one time, Film4 and BBC Film each have around 120 projects being actively developed. However, there is a concern the funders don’t feel the full benefit of this development.
“The scale of public service broadcaster investment in development fulfils a key talent incubation role that most other market players do not match but ultimately benefit from,” noted the report.
From 2019-2022, BBC Film backed more than double the total number of films financed by all other public service broadcasters combined, even though Film4 had an annual film investment fund of about £25m in this period (which dropped to £18m in 2024), more than twice the £11m annual budget that BBC Film spends on films. Film4 prioritises fewer, but bigger budget, features, working with filmmakers such as Yorgos Lanthimos and Jonathan Glazer.
On average, according to the report, the public service broadcasters contribute 17% of the total budgets of projects.
Public service broadcaster (PSB) annual investment in UK-originated drama is far higher than what is allocated to producing new films – £340m versus £24m in 2022. However, this film investment translates into an average spend of about £1m per hour – not far off the equivalent public service broadcaster average spend per hour on high-end drama.
The PSBs have also been hit with a potential devaluing of their TV screening rights when partnering with global streamers, the report discovered. Previously, UK broadcasters could enter into co-financing deals with major US studios, safe in the knowledge they would not be competing for UK TV viewers. Once the US studios opened up their own streaming services, this changed, with the US studios now also looking for a first UK streaming window, ahead of a traditional linear UK transmission.
Apple, Amazon and Netflix are understood to be firmer in requiring an exclusive first window after any (often limited for awards qualification) cinema exposure – even when there is co-investment from a broadcaster.
For broadcasters, this could have more existential implications, said the report.
“Whilst other release windows have generally become shorter over the last decade, the ‘free TV’ window has been under increasing pressure,” explained the report. “It has typically been pushed back from 12 months to 24 months and sometimes even 36 months. Consequently, broadcaster executives are inevitably questioning the value proposition of their film investments when their own TV audiences must wait so long to see the projects they have backed.”
The number of projects with public agency investment – the BFI, Screen Scotland, Northern Ireland Screen Fund and Ffilm Cymru – going into production reached a peak of 29 in 2020, almost three times the number going in front of the cameras back in 2016. This echoes the BFI’s changing strategy – in 2017 it refocused its investment strategy to support less experienced, move diverse voices, but at lower budget levels.
In 2022/23 the BFI Film Fund annual budget was around £25m, which dropped to £18m per year under its revised strategy as the BFI Filmmaking Fund from April 2023. The BFI’s 2023 strategy also carved out the ‘impact’ fund for more experienced directors, whose films are budgeted over £3.5m. Over the entire 2014-2022 period, 65 percent of films backed by public money have had budgets under £1m.
End of ‘streaming wars’
As well as controversies around theatrical releases and TV windows, for producers, streamers’ production investment has come with insistence on buying out all rights from the producer, thereby removing the potential of generating any further ‘back-end’ revenue.
Another impact of the streamers entering the UK market has been the inflation of budget costs. One UK producer told the report: “As soon as you get a streamer on board, everyone involved doubles their costs and you know, it’s at least 50% more expensive with a streamer on board, if not double.”
Post-pandemic, all the streamers have been re-evaluating their overall content spending plans and the role of UK film within their investment strategies is constantly evolving.
The Hollywood majors are now focusing on profitability, forcing them to rethink their streaming strategies, as investors lament rising interest rates. “This effectively means that this phase of the so-called ‘streaming wars’ is over,” said the report.
Content budgets have been cut by most of the legacy companies, although investment by Netflix, Apple and Amazon have held up or even been increased. But the extent to which this trio will commit to spending on UK production over the longer term is still not clear.
HETV speeds ahead
While local film production slumped to its lowest-ever levels in strike-addled 2023, local HETV production stands out as the only category of production that attracted more investment in 2023 than in previous years, with a 25% bump. Local HETV attracted five times more investment than film, of £812m versus £160m. The report posited that “homegrown TV production was relatively impervious to the negative factors affecting all of the film side of the business as well as international investment in British TV production (which fell by 49 percent)”.
Owing to the broadcaster commissioning process and terms of trade historically negotiated by trade body Pact, the business model for independent TV production is perceived as less risky, with more consistent commercial upside than film production.
Since 2014, there have been a little over 2,000 companies active in film and/or high-end TV production. Only 2.4% of these (48 firms) have been active in both. Of these, 73% started with film production before moving into TV. Over the last three years, these diversified production companies have made nearly twice as many TV shows as film projects.
Recommendations
The report made five recommendations for reviving the UK independent screen sector. They are:
1. ‘Media management’ skills development
“It is apparent that there is a dearth of people in the film production sector with the entrepreneurial vision and management skills required to scale production companies able to compete successfully in the global market. To address this, it is recommended that film schools, universities, and other industry training bodies develop more extensive MBA-style programmes to better equip new generations with the full range of business skills and acumen.”
2. Fostering corporate partnerships for diversification
“Looking towards the UK’s successful tech start-up sector may offer inspiration for schemes to encourage and stimulate partnership and innovation. Established mechanisms like ‘accelerator programmes’ and match-making initiatives can foster effective collaboration between start-ups, scale-ups, more established corporates, and investors. These can lead to a range of partnerships, joint ventures, and sometimes result in formal mergers and acquisitions.”
Read more about such a scheme, UK producers Andy Paterson and Annalise Davis’ partnership with virtual production technology specialists Dimension Studios and the Vue cinema chain here.
3. Private equity investment
“Double down on encouraging investment in the equity of production groups. For relatively early-stage companies (within seven years of their first commercial trading), such investments can be carried out via the government’s EIS and/or VCT (Venture Capital Trust) schemes that offer tax relief to investors.
“It is also suggested that government initiate a full review of the EIS regime for film and TV in the post 2018 Finance Act period. The objective of this would be to ascertain whether any tweaks to the rules could counter the exodus of private investors from the sector seen since then.”
Read more about the EIS scheme here.
4. Creating mechanisms for ongoing investment in UK talent
“Efforts are made to devise schemes to facilitate investment in the ongoing careers of our most talented writers, directors, and actors. Any such mechanisms must tackle the thorny topic of the most successful talent being snatched up by well-funded international groups after their early careers have been nurtured by domestic players.
“Within the public agency sector, it may be possible to formulate some kind of ‘first look’ provision that makes investment in first-time filmmaker projects contingent on having the option to invest in an agreed number of their future projects.”
5. Enhanced film finance data
“There is an opportunity to use the application process for the new [UK tax credit] Audio-Visual Expenditure Credit (AVEC) as a mechanism to gather additional detailed information on financing sources for film and HETV. Without making the submission procedure too onerous, it would be possible to aggregate and make available extremely valuable data on the dynamics of UK film and TV financing that has never been revealed before – and all without compromising the confidentiality of information about individual projects. The significant financial rewards available via the AVEC scheme should provide sufficient incentive for participants to share their data in a secure manner.”
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