Booming Budgets: Streaming boom pushes big budget TV and film production spending in UK

December 19, 2021


3 min read

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What's going on here?

Following a stall in film and TV production in the UK last year due to the Covid-19 pandemic, the ongoing streaming wars between British broadcasters and successful US streaming platforms such as Netflix, Disney Plus, and Amazon, have propelled new records for production spending in 2021 which are predicted to exceed £6bn.

What does this mean?

2020 saw a concerning, albeit understandable, decline in the UK’s traditional broadcasting production spending. Broadcasters such as the BBC, ITV,  and Channel 4 spent £1.1bn on film and TV production which was a drop of 10% to the lowest level this decade. Frustratingly, they had a captive audience, with the majority of Britons sitting at home eager to forget the misery of lockdowns and spending much of their day watching TV. However, it was the shake-up in budgets and scheduling caused by the pandemic which meant that already shrinking broadcasting stations were unable to compete with the dominance of US streaming giants.

This year, alongside a high demand for content by viewers, British broadcasters have been unwilling to give up the fight. They are predicted to have spent almost double than last year and have invested significantly in big-budget TV shows like “Peaky Blinders”, “Line of Duty”, and “Love Island”. Coupled with new seasons of TV shows like “Bridgerton” and “The Crown” from Netflix, spending on TV production in the UK, compared to film production, has already been significantly higher this year.  As published in the British Film Institute (BFI) figures, spending on TV production in 2021 is already at £3.3bn, and film production, which is historically equal to TV spending, is only at a measly £1.4bn.

What's the big picture effect?

Despite the unusually low levels of film spending in the UK this year, the number of big-budget films moving their production to the UK seems to be on the up. This is evidenced in the number of both national and foreign production companies seeking larger UK studio spaces. In November, Netflix renovated its Shepperton studio to twice its original size, accommodating the nearly 30 films it has made in the UK this year. Similarly, Apple is set to occupy studios in Buckinghamshire, and Disney has upgraded its studio size at Pinewood in Slough to continue production of its Marvel and Star Wars franchises. However, even film productions that already have a base overseas seem to be heading to the UK. In November, Amazon announced it would be moving the “Lord of the Rings” production from New Zealand to the UK.

Although the strict Covid-19 restrictions still in place in New Zealand might justify Amazon’s choice, there is a more enticing incentive that might explain the UK becoming a global production hub. The incentive takes the form of tax rebates from HMRC for homemade or culturally significant film and TV. The ability to claim 25p for every £1 of expenditure surely seems like a steal when the predicted expenditure per episode of shows like “Game of Thrones” is at £1m.  In addition, the instability caused by the pandemic has been softened by government-backed insurance schemes and restriction exemptions for crew members.

The thinking behind the incentive is not just to halt production companies moving to cheaper locations. A further by-product is that increased production spending in film and TV will serve to have a positive effect on the local communities supporting their creation. Job opportunities are likely to arise for those involved in the expanding infrastructure and technical support. Even the tourist industry may benefit, with set tours – for instance the Warner Brothers Studios – becoming more and more popular. After all, the 2020 “Screen Business” report estimates that between 2017 and 2019 for every £1 the economy lost in tax rebate, it generated £8.30 in screen production.

Nevertheless, within every boom lies a fallout. The surge of film and TV  production from British broadcasters including the BBC and ITV is predicted to stagnate as they struggle to outcompete dominant US rivals for studio space and behind-the-scenes staff. So all things considered, will the tax rebate initiative continue to promote prosperity in British broadcasting, or will the surge in spending seen in 2021 end on a cliff-hanger?

Report written by James Evans

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