Film and TV sector adds billions to UK economy

08 April 2020 Consultancy.uk

The film and television sector is an extremely important source of GVA growth for the UK, expanding at more than three times the rate of the wider economy. According to a new report, UK film and high-end television spending also generates an annual trade surplus of close to £1 billion.

The silver screen might more aptly be named a gold mine on the strength of recent growth figures in the film industry. Global cinema box office revenues have boomed in the past few years, surpassing the $42 billion mark in 2019. While much is written of the successes and failures of the cinema scene with regard to the profits of big studios, however, it is more often spoken about as if it exists in a bubble, with little heed given to its wider impact.

Now, a new research piece commissioned by the National Film and Television School (NFTS) has found that the gross added value (GVA) of film in the UK is exploding when compared to other sectors of the national economy. The UK’s wider GVA growth currently sits at a relatively sluggish 4% – something narrowly surpassed by the creative industries collectively – film and high-end television (HETV), which has a somewhat similar production cycle to film, far surpass that at 16% and 15% respectively.

Value of Production Spend in the UK by Type and Growth in GVA by Segment

According to the NFTS analysis, the creative industries of the UK saw rapid 12% growth between 2014 and 2017, reaching more than £3.6 billion in that time. The largest part of this was film production, where spending had already topped £2 billion by the end of 2017 – a figure which will have continued to climb since. This represents a major economic benefit to the economy of Britain as a whole, via the tax system, but also to local economies where productions take place.

Illustrating this, according to 2018 analysis by Film London, for every pound spent on by feature films on local authority charges, a further £2.76 is generated for the local economies of the boroughs. £1.79 of that goes to local businesses such as cafes, shops and hotels, while the other 97p passes into local supply chains. This means that for a feature film which typically spends £10,000 a day on local council fees, an additional £27,600 benefit will be seen in the local economy. In London’s economy, that is the equivalent of enough money to support 1,680 full-time jobs.

The authors noted in the report, “The UK audio-visual production industry has recently experienced a “golden age” as strong growth in the film industry has been complemented by growth in the adjacent categories of high end TV, video games and animation. Growth in UK Film & HETV spend has been fuelled by increases in high-budget, inward-investment productions. Not only do these result in award winning on-screen content, but they also generated a large (and growing) trade surplus, and offer a large intangible cultural contribution from global viewership.”

Big spenders

In terms of the biggest spenders, UK broadcasters remain the nation’s dominant force. According to NFTS, the BBC alone commands a production budget in excess of £2.4 billion, while nearest rivals Sky and ITV have a budget of around £1 billion each. US studios meanwhile invest far less, with NBC Universal leading the pack at £398 million, and Sony close behind on a total investment of £319 million. This gap is largely because the bulk of US studios’ production takes place in the US, coupled with the fact the likes of BBC, Sky and ITV have to produce a far greater amount of content with their budgets to fill out their television schedules.

UK Film Industry Exports

The willingness of companies to invest in UK productions has been buoyed by British film’s strong export performance, with intellectual property royalties from content and other audio-visual services attracting global demand. According to NFTS, the industry runs a large and growing trade surplus, which was well over £900 billion in 2016 alone, and is able to attract a global audience for its films due to the UK’s positioning in the market.

This trade surplus has increased significantly since the 2000s and is indicative of the successes of the industry in recent years. At the turn of the century, intellectual property royalties of the UK film industry were worth roughly £500 million – but by 2016 this had boomed to £1.4 billion. Despite a hiccup in 2016, meanwhile, sales of audio visual and related services were worth around £700 million per year in 2014 and 2015 – a big increase on the £200 million of 2000.


×