UK independent film industry sees stagnant box office returns

11 August 2023 Consultancy.uk 4 min. read
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The UK’s independent film industry faces multiple headwinds, as its revenues stagnate. A new study of the British industry suggests that revenues are around one-third of what they were in 2013 – while several negative factors are discouraging innovation and pushing talent and investors elsewhere.

The UK’s independent film industry has been enduring difficult times, even before the coronavirus pandemic shut down cinemas in 2020. 2019 had seen revenues across all sources drop to a historic low of less than £200 million. That includes sales at the UK box office, the international box office, packaged media, digital media (including revenues from subscription-based television channels such as Sky TV) and free TV. It is a far cry from 2013, when estimates suggest those combined forces saw sales hit £1 billion – including around £400 million at the international box office.

To try and get a handle on the factors causing this alarming decline the British Film Institute (BFI) commissioned an analysis by Alma Economics into the industry. Ultimately, what the researchers found was that the UK independent film industry is being shaken in three critical areas; as well as the fact revenues are showing signs of stagnation, budgets are not growing at a market rate, and costs are escalating.

UK independent film industry sees stagnant box office returns

Looking at aggregate production budgets, adjusted for inflation, from the BFI’s production tracking database, Alma’s researchers found that budgets peaked in 2017. The aggregate of just under £600 million was bolstered heavily by other investment. Supported productions – with investments either from co-producers and other country partners under the terms of a bilateral co-production agreement or the European Convention on Cinematographic Co-production; or inward investment from overseas – accounted for around £400 million of 2017’s budget aggregate.

In the years following, this seems to have driven a key decline in budgets. In 2019, aggregate budgets had already fallen to around £500 million, before 2020 saw that figure drop below £300 million. In that last era, supported independent productions accounted for less than £200 million. As such, it seems that factors relating to the UK’s economic environment are putting off investors from commissioning independent content there.

In particular, Alma’s study marked out ‘rising costs’ as a key factor for this. Some producers suggested costs had increased by 10-205 from implementing Covid-19 safety measures – but crew, cast, and studio space were also commonly raised by producers as inputs which had increased in cost. This was reportedly driven by increased demand for professionals and space as a result of large quantities of inward investment across the UK screen sector, as well as skills shortages – something which the conclusion of Brexit, and tightening of UK immigration criteria, may have exacerbated.

UK independent film industry sees stagnant box office returns

The rise in costs, plateauing in funding and profits has resulted in a marginal decline in productions, too. The number of independent films shooting between 2014 and 2018 held steady at around 200 – with roughly half being fully independent and half supported. In 2019, that began to decline, and was almost halved in 2020. While this was again partially due to the lockdown, it seems that UK independent film will struggle to recover, if things do not change.

Commenting on the study, a release from the BFI said, “This review sets the stage for action in three clear ways. Firstly, it establishes the strong case for UK independent film to receive specific policy attention. It provides evidence that, despite measures from government and public funders introduced in the last few years and an unprecedented production boom, there is a danger of stagnation and market failure. This precarious position is not caused by any specific failure of the artform, which remains culturally strong, and instead appears to be caused by the effects of changes in the wider UK film and TV value chain, which supports the call for policy intervention, as long as it is based on proper policy modelling.”

Supporting these calls to action, Alma also estimated how well the UK’s independent market would likely recover from the pandemic. Conservative estimates saw revenues likely to rise above pre-pandemic rates, hovering just under £400 million – more of less level with 2018’s rates. However, in a best-case scenario, the projection was little better, of just under £500 million. This stagnating revenue would put the UK’s independent film sector well behind global independent box office trends. Having been around $4.8 billion in 2019, estimated independent box office receipts for 2022 stood at $5.6 billion, according to figures from recent research by Indy Film Library.