2. The Film Industry

3. Domination of Hollywood due to: size of US market (x 5 UK) export at marginal costs concentration of resources –- economies of scale –- high budget productions –- heavy promotion –- spread of (high) risk Market Analysis

4. Cost of movies can only be reclaimed by global sales 1997 sales in $m CostUKGlobal Jurassic Park 27038614 Bean2327221 Full Monty3.569205 The least profitable film was Sony’s McHale’s Navy cost $42m made $ 5.5m ‘One loss like that would bankrupt the British Film Industry’

5. Motives for internationalisation US cinema market is mature –falling sales, shorter runs –excess supply – demographic shift (ageing) Video/DVD and Pay TV are growing but cinema success is still the showcase

6. Competitors and their strategy High profit/high risk business now part of vertically integrated cos. eg Sony, Disney, Fox/News Corp Universal/Vivendi, AOL/Time Warner –exploiting synergies - music, games, charactersexploiting synergies Reverting to formula ‘franchise movies’ –‘Son of Spiderman 17’ (FT 18/3/3)(FT 18/3/3) –less money of overseas co-productions (Guardian 8/3/3) (Guardian 8/3/3)

7. Overseas opportunities deregulation of TV in Europe poor access to & quality of cinemas particularly in UK –multiplex chains : an outlet for US films –control of world-wide distribution –buy-in and re-export overseas productions eg Italian Westerns, HK kung-fu, UK costume drama Moran, A (ed) (1996) Film Policy, London, Routledge

8. Globalisation Revival of local tastes and products US film exports falling Growing markets in Asia ‘The sums are simple. Western dominance of the cinema will be over in 10 years’ Shekhar Kapur maker of The Guru 23/8/02

9. The British Film Industry www.filmcouncil.org.uk www.bfi.org.uk: Dyja, E UK Film... Overview ‘While there is definitely a film industry in Britain, it is much harder to find a thing called The British Film Industry’ ‘Harry Potter may well be the most successful British film of all time but its profits are bound for America’

10. Share of UK box office 2007 US & US co-produced67% US/UK 28% UK 11% The ten major distributors had 42% of releases, 95% of box office revenue Only 44% of films certified as British in 2006 gained a theatrical release in the UK and Republic of Ireland

11. Latest results 2007 UK Film Council UK Film Council Inward investment £532m Total production spending £747m UK films 134 of which 55 ‘indigenous’ UK films 39% of UK box office http://www.ukfilmcouncil.org.uk/yearbook

12. UK Film exports  UK film exports of £913 million, contributing a trade surplus of £128 million to the UK's balance of payments  The UK film share of global cinema takings was 12%, or US$3.3 billion, equal to approximately 700 million admissions  Thirty of the top 200 films at the world box office in 2001-2007 were based on stories and characters created by British writers, including JK Rowling (the Harry Potter films), JRR Tolkien (The Lord of the Rings), CS Lewis (The Chronicles of Narnia) and Ian Fleming (Casino Royale and Die Another Day).  British directors directed 20 of the top 200 films and British actors appeared in more than half of them. The director Ridley Scott appeared most frequently in these charts, with Orlando Bloom and Sir Ian McKellen the most watched actors.

13. Weaknesses Under-capitalised, –Film Four –unable to attract investment –lack of integrated companies –patchwork of initiatives -> too many poor quality films –'wordy, worthy, parochial’ Reliant on US distributors

14. The value chain ResourcesPlant Production companies Distribution Exhibition Stories Scripts Locations Creative talent Studios Design workshops UK strengths UK weaknesses

15. Partnerships What is a British Film? Star Wars? Notting Hill? Bond? Shakespeare in Love? Chicken Run? The Beach? Location, studio, cast, soundtrack, finance? 70% of budget spent in UK 70% of labour costs UK/EU qualifies for tax relief talent drain to Hollywood Strength of the £ –loss of business to Aus & Canada

16. How can Governments help the Industry? Free trade v Protectionism EU quotas: 50% of TV output must be European France: 40% must be French! Subsidies on production Tax breaks

17. public investment in film 2006/07 was £277 million. The principal sources of public funding for UK film in 2006/07 were the film production tax relief, National Lottery and grant-in-aid from central government, The European Union provided £8.8 million in 2006. The UK Film Council budget (£67 million) partly grants to other organisations. British Film Institute (23.7% of the total), followed by the UK Film Council (22.9%), BBC Films and Film4 (both 6.5%). Film production took 66% of the total spend, but exhibition and distribution, training and skills, and archives and heritage also received substantial allocations.

18. The Film Council Cinema Fund –specialised film network ‘arthouse circuit’ Print and Advertising Fund –marketing of specialist films Premier Fund –supporting potential commercial successes Gosford Park Training and Education –scripts, technicians, young film-makers

19. DCMS mission 'problems cannot be solved by subsidy...but by better scripts, integrated UK film companies, increased access to venture capital, and partnerships with the rest of the world' "We aim to build on Britain's strong Film Culture to develop strong Film Commerce" How are they doing? 2005 report2005 report