Report: Brexit deal key to sector growth

October 2018

UK could ‘lead the world when it comes to film and television’

  • Report finds that by 2025 UK’s AV sector is on course to become leading international hub – but a disappointing Brexit deal could threaten this.

11 October 2018 – The UK has the potential to become a major global hub for the audio-visual (AV) sector in the next decade, including as a producer, broadcaster and on-demand provider of acclaimed films, television programmes and other screen-based entertainment output – but only provided Britain maintains a strong trading relationship with the EU going forward, new research has found.

A study by independent economists Oliver & Ohlbaum Associates shows that the UK is in prime position to continue its trajectory towards becoming a world leader for the AV and related sectors, including as a major creator, broadcaster and on-demand provider of global IP across scripted and non-scripted output, and as the leading co-ordinator and financier of global content projects across TV drama, feature films, high end factual and entertainment output and other screen-based content. According to O&O’s analysis, by 2025 the UK AV sector – already the largest in Europe with a GVA of £15 billion and growing by 3.1% a year – is on track to build on its successes and be established as the go-to destination for filming and other elements of production, broadcasting and other forms of content distribution. All this is at a time when AV businesses are generally moving from national to global models. This could see the AV sector’s value added contribution to the UK economy grow to between 5 to 8% a year, with employment growing by similar levels.

Commissioned by a cross-industry coalition including the Motion Picture Association (MPA), COBA (the Commercial Broadcasters Association) and the Authors’ Licensing and Collecting Society (ALCS), to assess the UK AV sector’s growth prospects, the report finds that the UK is on course to become a major source of the high-end creative and technical skills that are in demand around the world. This would support the growth of ‘best of British’ content including Vanity Fair, Mary Poppins and the Secret Garden, bringing value to the economy as well as cementing the UK’s reputation as a premier destination for crew, locations, visual effects teams and other logistical and technical infrastructure. However the report cautions that an end to Brexit uncertainty and a good outcome to negotiations with the EU is critical to this.

The report highlights that international sales will be crucial to future growth, but notes that of the AV sector’s £1.9 billion annual trade surplus, £1.3 billion is currently with Europe, meaning for this growth to materialise it is critical to retain access to EU markets. Equally, it suggests that the sector’s growth prospects can be enhanced and the UK established as a key hub, provided that we maintain a strong trading relationship with the EU – as Europe currently accounts for two thirds of the sector’s annual trade surplus – with industry experts warning that a bad outcome from negotiations with the EU will jeopardise the future growth of the sector. Likewise, experts are clear that a flexible migration system allowing for a flow of creative talent from and to Europe must be maintained.

Britain’s AV content, from films such as Darkest Hour to television programmes like Downton Abbey is already celebrated internationally, and UK qualifying films released at the worldwide box office in 2016 earned one sixth of total global receipts[1]. The report finds that these consumer-driven results can be surpassed within the next decade, with Britain cemented as a global centre for AV – including as a major source of IP, the leading co-ordinator and financier of global content projects, the international base for leading global channels, platforms and on-demand aggregators and a major source of the high-end skills required by the sector.

Stan McCoy, President and Managing Director, Motion Picture Association EMEA, commented: “The British film and television industry is thriving and has every reason to continue to do so in the coming years, assuming the government policies and trading conditions remain favourable. The MPA and its member studios are proud to play a critical role in the UK industry production and distribution ecosystem; supporting the development of high-quality content, loved by audiences here and around the globe, which contributes to the UK economy and boosts the creative industries’ European and Global export growth. We are looking forward to being able to help the AV sector here to grow and strengthen in the coming years.”

Adam Minns, Executive Director, Commercial Broadcasters Association, added: “International revenues –from Hollywood blockbusters shooting here, to exports of fantastic British TV shows, through to the engine room of international broadcasters, and on-demand services – are the current and future powerhouse of the UK’s audio-visual sector. This report demonstrates how international sales are growing at twice the rate of domestic sales, and will be key to supporting the next generation of jobs. But we cannot ignore the fact that Europe is a key part of this growth – without a strong relationship with the EU after Brexit this growth will be put at risk”.

Barbara Hayes, Deputy Chief Executive, Authors Licencing and Collecting Society, added: “The UK’s AV content is in high demand around the world and creators are the beating heart of this thriving industry. Of course, to support this industry we must maintain strong and positive trading relations with the EU, along with an IP regime that continues to protect and promote creativity.”

The AV sector is a key economic success story for Britain, and a major contributor to the success of the UK’s vibrant creative industries, which are worth a record £92bn to Britain[2], up from £85bn in 2015 and growing at twice the rate of the general economy. Businesses producing film, television, music and other AV content have created 194,000 jobs around the country[3], an increase of 20.1% since 2010, while also encouraging significant inward investment and tourism. Exports are a key part of the AV sector’s success, accounting for £4.7 billion a year, including £2.7bn in inward investment production[4], £900m in international broadcasting, as well as IP sales and post production.

The report, which is supported by a broad coalition of AV sector groups, finds that industries closely related to the AV sector, such as visual effects (VfX), video-based marketing and advertising, games development and story-telling (fiction publishing) are likely to be both very high growth and dependent on the health and dynamics of the UK’s core AV activities.

Key findings from the report include:

The UK has the largest AV sector in Europe, with a GVA of £15 billion a year – 20% larger than Germany and 50% larger than France – and growing by 3.1% a year.

Exports account for £4.7bn a year of the UK AV sector’s success. This includes inward investment production (£2.7bn), international broadcasting (£900m), followed by IP sales and post production.

While domestic AV sector sales look set to grow by 2 to 3 per cent a year, the value added contribution of the sector to the UK economy could well grow by more than double that to reach between 5 to 8 per cent a year, with employment growing by similar levels.

Of the £1.9bn annual trade surplus posted by the UK AV sector, £1.3bn is with Europe.

ENDS

For further information contact:

Jennifer Lipman, Lexington Communications (+44 (0)20 7025 2325 / jennifer.lipman@lexcomm.co.uk )

For a copy of the report, click here.

[1] 2017 BFI Statistical Yearbook, BFI, 27th September 2017

[2] Creative industries’ record contribution to UK economy, DDCMS, 29th November 2017

[3] Ad-hoc statistical analysis: 2017/18 Quarter 3, DCMS, 11th October 2018

[4] The contribution of the UK based film, TV and TV related industries to the UK economy, and growth prospects to 2025, Oliver & Ohlbaum Associates Ltd, February 2017