Five actions could revive struggling indie UK film sector, according to British Screen Forum report
Five actions could revive struggling indie UK film sector, according to British Screen Forum report
They include galvanising private equity investment and improved access to data.
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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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 film 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.
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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.
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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.
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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.
It's a long article and makes for grim reading but there are definitely things the government could do to improve the situation without spending any of their money.