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UK Film Thinks About the Future

UK Films Global Market Share

Overseas Performance Matters

The Report makes one obvious point about film that is too easily forgotten. From 72% of the box office for films made exclusively with UK money to 86% of the box office for co-productions, all successful films in which Britain is involved must get over ¾ of their revenue overseas.

That should not be a surprise. If a middle sized country is to be a player in a global world, it must have premium products and services that get most of their revenues from somewhere else. That’s true of the City of London, and equally true for successful UK firms like Rolls Royce aero engines or HSBC.

Do we wish our audiovisual industries to be one of those?

If so, the UK must must look out — in all senses. There are strong competitors.

The figures in the BFI Statistical Yearbook tell us that UK film exports amount to £1.5bn, of which £1bn comes from the films themselves and the rest from film-related services we provide overseas. (See Page 190).

As the report says: “The challenge for industry and policy makers is to grow these revenues and maximise the proportion that comes back to the UK.”

The report does not really spell out how we are going to do that. So, by way of a first step up to that challenge, what does it tell us?

First, where does the current money come from? The UK’s largest film export market is the US.  Next is Europe, worth about £400m.  Asia and the Rest of the World provide £111m.

Europe? America? ROW? Where are UK’s Advantages?

Where does UK do relatively well? Where do we have a competitive advantage? (While the US is our largest export market, we have little competitive advantage in the US itself: it is already a very effective exporter of films).

Competitive advantage simply points to where an investment might deliver relatively higher benefits. It does not, of course, mean other countries are not worth investing in – with our language  advantage, production skills and cultural proximity, we could surely do better all round.

However, one rather obscure statistic in the Report suggests that the UK has a significant competitive advantage in Europe. (While 35% of our exports go to the European Union and the rest of Europe, those countries themselves only have about 22% of the world film market.)

But the UK is weak, by this same measure, in Asia and Rest of the World, which are now, in the aggregate, relatively bigger global film players than the UK . This week, the Economist draws attention to Britain’s  lack of success in exporting to China, India and Brazil.

British Exports, 2010.

The majority of the £1bn “film exports” are revenues coming back to UK-based distributors, sales agents and rights holders. But the majority of this money must come from the licensing of US films or US/UK financed films by  companies based in the UK.

The Table included at the top of the post makes that obvious. The larger category, studio-backed UK films, covers the Harry Potters – they make up about 14% of the global film market. The smaller category, described as “Independent UK Films”, comprises about 1.5% of the global film market. UK Independent Films are, of course, on much smaller budgets than studio-backed films. (IMDb thinks the budget of Kick-Ass was $30m while the budget for a Harry Potter film is about $250m.)

According to BFI 2010 data, “…Matthew Vaughn’s Kick-Ass earned $105 million worldwide in 2010.” 

By 15 April 2011 The King’s Speech had grossed $393 million worldwide, a huge result for a UK film. (Harry Potter and the Half Blood Prince had reached  $950m by November 2011 according to IMDb.)

Only a small proportion of these box office revenues return to the UK, as licence fees.

More Mainstream Films?

The Prime Minister has been criticised for saying, in anticipation of this report, that the UK should make more “mainstream” films. It’s not surprising he should say that.  That’s where the money is.

Can we think bigger – and can we find investors for bigger films– without always relying on Hollywood?

Where Next?

The Report is now handing this question on to the British Film Institute, into which the former UK Film Council has been collapsed. As it says, “The Panel wishes to see the BFI lead the way towards a more self-sustaining export industry that increases its profitability by successfully connecting with an increasingly broad range of markets.”

That’s a tough call. This could be a long conversation….