Small European Film Markets: Portraits and Comparisons

UK

The annual global market share for UK films is closely aligned with the success of inward investment films supported by the major Hollywood studios. Often, this gives rise to debates regarding the dependency of the UK film industry on Hollywood studios.

The low national box office share reflects the strong dependence on Hollywood. In 2022, the UK box office revenue amounted to €1.08 billion, showing a 28% decrease compared to 2019. The national films’ share in 2022 was 12.2% (UNIC, 2023). According to the BFI, the total number of films going into production in the UK in 2023 was 207. Cinema admissions in 2023 showed a 30% decrease from the pre-pandemic levels of 2019.

The proportion of total box office achieved by studio-backed films fluctuates from year to year and is largely dependent on the performance of a small number of titles. According to the British Film Institute (BFI), studio backed films are films that are wholly or partly financed and controlled by a major US studio, but which qualifies as British under the cultural test for film. Between 2017 and 2021, the share of box office achieved by UK studio-backed productions in the 23 markets covered by Comscore peaked at 26% in 2019 when the top earning releases were Avengers: Endgame (US 2019) (€2.1 billion worldwide box office) and The Lion King (US, UK, KE 2019) (€1.2 billion). According to the BFI, in 2023 inward investments contributed to 77% with €1.2 billion (£1.04 billion) of total film spend, a 40% decrease on 2022, in light of Hollywood films impacted by strikes. Domestic films accounted for just over 11% of the total film spend, a 13% decrease compared to 2022. Co-production spend accounted for 12% of the total film spend. Barbie (US, UK 2023) took the lead as 2023’s top earner at the box office, securing €108 million (£95.6 million) and accounting for 10% of the annual box office (BFI, 2024).

Research conducted by the BFI also examines the export dynamics of UK independent films, analysing the independent sector’s opportunities and challenges. According to the BFI, UK independent films are films produced and financed by independent organisations, meaning without US studio support. However, there is ambiguity of classification of independent films, reflecting that some films labelled as independent may receive production or financial support from organisations not considered independent, such as large media groups or subsidiaries of large studios. In 2023, the top 20 UK independent films generated a total box office of €38.3 million (£33.7 million), marking a 51% decrease from 2022, and accounting for 92% of the year’s entire UK independent film box office revenue. Overall, independent UK films account for 3.8% of the total UK box office. The top 10 grossing titles in this category in 2021 earned a total of €183.6 million across the 23 markets, less than the combined earnings of the top two UK independent film releases of 2018 (BFI, 2024).

Stories and characters born from the creativity of UK writers have prominently figured among the top-earning films globally. The BFI uses the global box office performance of UK films and foreign productions that utilize UK source material as an indicator of British culture’s international impact and exposure. Of the 200 highest earning films released worldwide between 2012 and 2021, 23 were based on stories and characters created by UK writers. Together these films earned €13.4 billion at the global box office (10.5% of the total gross from the top 200 films). UK films and British talent won 23 major film awards in 2021/22, including 10 BAFTAs and 6 Oscars.

In the period between 2017 and 2021, film and video production turnover grew by 27%, film and video distribution turnover grew by 66%, while turnover for film exhibition fell by 2% (BFI, 2022). The UK film industry exported €2.1 billion (£1.8 billion) worth of services in 2020 (the latest year for which data are available), of which 88% comprised royalties earned overseas from the exploitation of UK intellectual property and 12% comprised the sale of UK-based audiovisual and related services to foreign investors.

The shortage of skills poses a significant threat to the independent film sector, especially for smaller production companies (BFI, 2022). According to the Annual Population Survey conducted by the Office for National Statistics, in 2021 around 106,000 individuals worked in film and video production, film and video distribution and film exhibition (BFI, 2023). The overall growth in the size of the film workforce between 2012 and 2021 was driven primarily by increases in the number of employees in film and video production.

Over the past decade, the number of domestic films slightly increased. The number and share of co-productions saw a slight decline through the early 2010s. The inflation-adjusted revenues for the independent film sector in the UK consistently declined through the previous decade, in large part driven by stagnating box office sales and a sharp decline in global sales of packaged media products. While UK independent film revenue from digital media has increased significantly over the past decade, a trend which accelerated during the Covid-19 pandemic, these revenues have not been enough to reverse the wider trend of decline. In some years the downward trend has been masked by a small number of very successful commercial ‘hits’, highlighting the inherent risk of investing in UK independent film and the benefits of diversifying across a slate of films consisting of potential winners and losers from a commercial perspective.

When assessing the “global cultural and commercial influence of UK filmmaking skills and talent”, the BFI also factors in the involvement of British talent in highly profitable films. British actors played leading and/or supporting roles in 67% of the 200 highest earning films from 2012-2021. UK directors were behind 28 of the 200 highest earning films worldwide from 2012-2021 (BFI, 2022). Eight of the top 20 highest grossing films released worldwide between 2012 and 2021 were shot wholly or partly in the UK, while 17 of the top 20 films featured British actors in lead or supporting roles. In addition, the story for Captain America: Civil War (US 2016) (while featuring superhero characters created by American writers Joe Simon and Jack Kirby) was based on a series of comic books by British writer Mark Millar.

JRR Tolkien and Ian Fleming are the most influential UK authors, providing the inspiration for three top 200 films each. Tolkien tops the list in terms of box office with the trilogy of films based on his novel The Hobbit generating earnings of €2.6 billion ($2.9 billion), while the three films based on Fleming’s James Bond novels earned €2.5 billion ($2.8 billion). There are also three films based on the Fifty Shades book series by EL James, which grossed €1.5 billion ($1.3 billion). On the top lists are two films based on the How to Train Your Dragon series of novels by Cressida Cowell and two based on the Kingsman graphic novels created by Dave Gibbons and Mark Millar.

The film, TV and video games tax reliefs have recently been reformed to expenditure credits. The new Audio-Visual Expenditure Credit (AVEC) replaced the film, high-end TV, animation and children’s TV tax reliefs from the beginning of 2024. Film, high-end TV and video games are eligible for a credit rate of 34% (net rate of 25.5%) and animation and children’s TV are eligible for a rate of 39% (net rate 29.25%). Under the new rate, films in a budget range up to £15 million can claim an AVEC rate of 53%, equal to a relief of approximately 40% when a 25% corporation tax deduction is applied.

The Cultural Test for film and high-end television is points-based, with sections relating to content, cultural contribution, location, and cast and crew. In a consultancy report, the impact of the tax relief on the production of UK film was examined by analysing whether the relief had an impact on volume and whether it was incentivising production companies to make higher value productions (i.e. impact on budgets) (see Ipsos and Olsberg SPI, 2022).

The highest share of the total €4.8 billion (£4.23 billion) production spend in 2023 was contributed by high-end television, animation and children’s television programme tax relief (HETV) productions at €3.2 billion (£2.87 billion), or 68%; feature film production contributed €1.5 billion (£1.36 billion), or 32% of the total spend. According to the BFI, while single films shown on streaming services such as Netflix, Amazon, Disney+ and Apple TV are made in the same way as films for cinema release, their production spend is largely included within the total spend for HETV, as they qualify for HETV tax relief: there are a few single films funded by streamers which are captured within the film statistics. The twelve long-form single-episode HETV productions of 2023, featuring works such as Joseph Konsinski’s Apex (US forthcoming) and Ben Taylor’s Joy (UK forthcoming), had a total UK spend of €431 million (£379.2 million), reflecting a 59% drop compared to the expenditure for 22 productions in 2022, a trend that may have been influenced by strikes in Hollywood.

Release strategies have become more adaptable in recent years with distributors increasingly experimenting with sequencing, the length of windows, and pricing.

According to the Film Distributors’ Association, in 2022 there were a total of 1,087 cinemas in the UK and the Republic of Ireland. Distributors allocate more than £350 million annually to releasing titles in the UK and Republic of Ireland, with nearly half of this amount dedicated to national advertising campaigns spanning digital, social, and traditional media. According to the UK Cinema Association, the UK had 4,637 screens and 846 sites in 2022. Several initiatives have been launched to promote cinema attendance and enhance film literacy, such as free-for-schools streaming service Into Film+, connecting cinemas with local schools, and the Into Film Festival for young people and teachers, among others.

In 2021, in the UK, there were 375 film distributors and 290 film exhibitors (BFI, 2023). Most companies were small (turnover under €282,000 or £250,000). The overall turnover for film industry companies increased by 52% between 2017 and 2021, rising from €15.7 billion (£13.4 billion) to €24 billion (£20.5 billion). The greatest increase over the period was seen in turnover for video production companies. Universal was the top earning distributor in 2021, with 51 films making €205 million (£181 million) at the UK and Republic of Ireland box office (including the top earning release of the year, No Time to Die (UK, US 2021). Lionsgate was the top earning distributor of UK independent films released in 2021, with seven titles grossing €10 million (£9 million). Sony was the top earning distributor of foreign language films released in 2021, with four titles grossing €2.2 million (£2 million) (BFI, 2022). According to Into Film, in 2021/2022 there were just under 18,500 registered film clubs in the UK, an increase of 5% compared with 2020/2021.

According to Omdia, in 2021 the UK market for film in digital video was the third largest in the world, behind US and China (BFI, 2022). The most popular streaming service was Netflix, followed by the BBC iPlayer and Amazon Prime.

UK qualifying films released in 2021 in the 23 major territories tracked by Comscore earned a box office gross of €3 billion ($3.6 billion) (to 13th February 2022), up from €910 million ($1.1 billion) for films released in 2020, according to BFI data. UK independent films earned €232 million ($281 million) from these territories, a 1.5% share of total box office for these markets (down from 3% in 2020).

The highest earning UK qualifying film across the 23 territories was Fast & Furious 9 (US 2021) with earnings of €519 million ($628 million); the highest earning UK qualifying film across all global territories was No Time to Die (UK, US 2021) with a gross of €540 million ($774 million). The highest earning UK independent film across the 23 territories was The Hitman’s Wife’s Bodyguard (UK, US, SE, BG, FR 2021) with earnings of €54 million ($66 million); this was also the highest earning UK independent film across all global territories with an overall gross of €79 million ($70 million).

According to the BFI data, UK independent films took 2% in 2021 (4% in 2020) of the North American box office and 2.5% (4% in 2020) of the box office in Europe (eight major territories, excluding the UK and Republic of Ireland). Overall, New Zealand had the highest share for independent UK titles at 9% (14% in 2020).

Evidence highlights that the UK film export market lags behind pre-pandemic levels. The percentage of total box office generated by UK films in 2021 is up from 13% in 2020 but less than the 29% achieved in 2019, which was the highest share of the period 2017-2021. The total theatrical gross for all films released in the US and Canada in 2021 was €4.1 billion ($4.8 billion), a significant recovery from €1.2 billion ($1.4 billion) in 2020, but less than half of 2019’s total of €10 billion ($11.4 billion). The top earning UK qualifying films released in North America in 2021 were Venom: Let There Be Carnage (US 2021), which grossed €176 million ($214 million), Black Widow (US 2021) (€152 million or $184 million) and Fast & Furious 9 (US 2021) (€143 million or $173 million). In total, the top 10 UK film releases earned just under (€900 million or $1.2 billion), a substantial increase on the €202 million ($245 million) made by the top 10 in 2020, but down from €3.4 billion ($3.9 billion) in 2019.

The analysis of the destinations of UK film exports as a percentage of the total for the period 2016-2020 shows that 48% were in the EU, while about 20% were in the US (BFI, 2022). Between 2016-2020, more than half of the trade surplus came from the EU (52%), while the US accounted for only 5%.

Outside the UK and Republic of Ireland, the market share for UK films released in 2021 in eight major European territories, including Russia, was 27.5%. This share is up on 2020 (18%) and similar to 2019 (28.5%). Shares in 2021 ranged from a high of 39% in Germany to 20% in France. The largest share for UK independent films was recorded in the Netherlands (6.1%) where The Father (UK, FR, US 2021) was the top earning UK independent title. The highest grossing UK independent film across the eight territories, however, was The French Dispatch (US, DE, CA, FR, UK 2021), which earned €11.5 million ($14 million). Overall, in the selected territories, UK independent films generated 2.5% of box office revenues, down from 4% in both 2019 and 2020. The total theatrical gross for all films released in the selected European territories in 2021 was €2.2 billion ($2.7 billion), up from €1.3 billion ($1.5 billion) in 2020, but less than half of the total for 2019 (€4.9 billion or $5.6 billion). The highest earning UK film in the selected European territories in 2021 was No Time to Die (UK, US 2021). As in 2019, all the top 10 titles were UK studio-backed films. In contrast, the paucity of big studio releases in 2020 was reflected in a top 10 list for that year which saw an even split between UK studio-backed and independent titles.

The overall market share for UK films in 2021 in five major Latin American territories was 31%. The share in individual territories in 2021 ranged from a high of 34% in Brazil to 28% in Argentina. The overall market share for UK films across six major Asian territories was 8%. This is up from 6% in 2020 but down from 18.5% in 2019. Shares in 2021 ranged from a high of 29.5% in Singapore to 5% in China. The 5% share for UK films in China was the smallest of any of the 23 territories analysed. However, it should be noted that China has a quota system which limits the number of foreign films shown in the territory. The total theatrical gross for all films released in the six Asian territories in 2021 was €7.8 billion ($9.3 billion), up from €3.8 billion ($4.7 billion) in 2020, but less than the total for 2019 (€11.4 billion or $13.8 billion). The overall market share for UK films in the two Australian territories was 31%, down from 34% in 2020 and 40% in 2019.

The policy framework in the UK is strongly oriented towards supporting the export of films and boosting the competitiveness of the film sector. The BFI, the leading organisation for film in the UK, handles the distribution of Lottery funds to the film industry. It provides a variety of funding schemes, including for development, production, and completion stages, international co-productions, and first features. Additionally, the BFI supports new directors, writers, and producers. The BFI International Fund was established in 2016 to support strategic international interventions for the UK’s screen industries. Also, the UK Global Screen Fund supports UK producers’ international business growth strategies, their work as partners on international co-productions and international distribution and promotion of UK independent films.

National Lottery funding also supports Creative England (part of Creative UK Group) to deliver Creative Enterprise. Creative Enterprise offers set of initiatives for screen businesses across film & TV, games, immersive, animation and creative tech.

There are also agencies in each of the UK nations that provide funding, such as Screen Scotland, Northern Ireland Screen, and Ffilm Cymru Wales Fund. In addition, the broadcasters BBC and Film4 invest in domestic film production. Film4 invests €29 million (£25 million) annually to develop and finance films for theatrical release in cinemas, working collaboratively with filmmakers and often in partnership with other funders.

In the UK, there are also regional investment funds, such as the Liverpool City Region Production Fund or the Yorkshire Content Fund which is a public-private investment fund for the TV, film, video games and digital sectors in the region.

The largest net spender on film in 2020/21 was HM Revenue & Customs, HMRC (€694 million or £611 million for film tax relief), followed by the BFI (€159 million or £140 million), the Scottish agencies (€30 million or £27 million) and Film4/Channel 4 (€28 million or £25 million). Production has consistently benefited from the largest share of public investment, the majority of which derives from the funding available through the film tax relief. Distribution and exhibition benefited from the second largest share of public spending in 2020/21 at 12% (BFI, 2022). Three of the top 20 UK independent films in 2023 were supported by public funding.

Unlike much of Europe, the UK traditionally favours a less regulatory film policy, and there have not yet been any investment obligations imposed on global streamers.