Mark Sweney 

Creative sector fills UK coffers as money pours into film and TV production

Combined TV, film and music industry grew almost 11% in second half of 2016, underpinned by digitally savvy UK consumers
  
  

Adele arrives at the 59th annual Grammy Awards in Los Angeles on 17 February 2017.
Adele arrives at the 59th annual Grammy Awards in Los Angeles on 17 February 2017. Photograph: Jordan Strauss/Invision/AP

At a time when the British economy is looking for leadership, step forward Darth Vader, Adele and Queen Victoria. One of the reasons GDP growth has stayed robust since the EU referendum is the UK’s creative sector, which has produced buoyant box office receipts thanks to Star Wars, healthy sales of Adele’s latest album and global demand for homegrown TV productions such as Victoria.

The combined UK film, TV and music industry boomed in the second half of last year, growing almost 11% compared with the previous six months, according to government figures. In December alone, the film sector accounted for half of all growth in the key services sector – which accounts for 80% of the British economy – because of box-office takings from UK-made Rogue One: A Star Wars Story and JK Rowling’s Fantastic Beasts and Where to Find Them.

The TV production industry is enjoying a golden age of investment, with deep-pocketed new arrivals such as Netflix pouring money into big-budget shows including £100m royal series The Crown.

This success is underpinned by a digital-savvy UK whose embrace of new TV and film services saw streaming and downloads of films and TV shows pass sales of DVDs and Blu-ray discs for the first time last year.

“The UK’s creative economy stands tall on the world stage,” James Murdoch, chief executive of 21st Century Fox, said last week.

Here is a breakdown of the performance of the UK’s creative economy.

Film

Last year’s three biggest grossing films in the UK– Rogue One, Fantastic Beasts and Bridget Jones’s Baby – helped drive a near-record box office take with ticket sales of almost £1.3bn. All three were shot in the UK, reflecting the ongoing boom in the film production industry.

The industry has flourished over the past decade, following the introduction of a 25% tax break for foreign film-makers, mostly exploited by Hollywood studios that have shot blockbusters in the UK. This has ensured that new films funded by US money such as Star Wars: The Last Jedi, Ridley Scott’s Alien Covenant and Christopher Nolan’s Dunkirk were made in the UK.

Last year, a record £1.6bn was spent on film production in the UK, a 13% year-on-year rise, according to the British Film Institute. Of that, £1.35bn was “inward investment” from mostly US studios, an 18% increase on 2015, looking to take advantage of tax breaks and the country’s abundance of off-screen and on-screen talent – from special effects specialists to actors.

“As far as the UK economy and Treasury are concerned, it is a great success story,” said Ivan Dunleavy, chief executive of the parent company of Pinewood and Shepperton studios, which hosted Rogue One.

He said: “Our role as major piece of [film and TV production] infrastucture is to keep responding to the growing demand. We brought on stream a whole load of extra capacity on 1 July last year ... we are already having to think about further expansion plans at Pinewood and Shepperton.”

TV

The arrival of Netflix and Amazon, whose shows have included Outlander and The Collection in the UK, and a film industry-style tax break for glossy shows costing at least £1m an episode has given a huge boost to the television production industry.

The BFI says the figure for inward production investment has nearly doubled from £252m in 2013 to a record of almost £500m last year.

There were 36 productions of high-end TV shows last year, an 11% rise in total spend to £477.8m. The budgets from mostly US companies accounted for 65% of all investment in high-end TV production in the UK, as Netflix and Amazon joined the likes of long-established players like HBO, which has made Game of Thrones in Northern Ireland since 2010.

“These platforms are buying for a global audience and commissioning ambitious, high-quality shows,” said Jane Turton, chief executive of All3Media, maker of programmes including Midsomer Murders, Shameless and Skins. “UK talent – be it writers, producers, cast, directors – are incredibly well-placed to respond.”

The industry is also undergoing an export boom, benefiting from sales to international broadcasters of UK-made shows Downton Abbey, Victoria, Poldark and The Night Manager to Top Gear, Sherlock and Come Dine With Me. Further income is generated by selling the rights for local versions of hit formats such as X Factor and The Voice.

Sales of UK made shows internationally rose 10% to a record £1.3bn last year, with sales to China rising 40% and the biggest market for British fare – the US – climbing 16% according to Pact, the trade body for independent TV producers.

Music

After years of declining CD sales and the threat of piracy, the music industry is back in fine health.

“In terms of recorded music it is very simple, growth is all being driven by streaming,” said industry analyst Mark Mulligan. “Next year, streaming will overtake [the value] of CD [sales] for the first time. We have finally got to the stage where streaming is growing strongly enough to offset the decline in legacy formats.”

Last year, 45bn audio streams were served in the UK by players such as Spotify, Apple, Deezer and Tidal, an increase of 68% year-on-year, according to music industry body the BPI.

In terms of value, streaming jumped 65% to £418m, just behind physical sales of £475m, as digital services kept the total music market in growth up 4.6% to £1.1bn, according to the Entertainment Retailers Association.

The popularity of physical formats continues to decline: CD sales fell 13%, despite the surprising the resurgent record market, which hit a 25-year high last year led by David Bowie’s final album Blackstar.

The UK live music scene is also in fine fettle showing 37% growth from £662m to £904m between 2012 and 2015, according to UK Music.

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