UK domestic production budgets declining, inward investment still strong

The UK industry remains heavily reliant on inward investment, which remains buoyant, with figures approaching last year’s record level.

88 films with budgets of £500k or more began principal photography in the UK in the first nine months of 2010, the lowest number of the last eight years. Ten were co-productions, 55 were domestic UK features and 23 were films funded by inward investment. The total number of productions is 68 fewer than 2003, with the sharpest drop off coming in the number of co-productions.

While the financial crisis has had a significant effect on the number of bilateral agreements, the trend of declining co-productions began before the crisis, in 2004. Co-productions have decreased from an eight-year high of 81 between Q1-Q4 of 2004 to only 10 this year.

While the numbers of films are down, value is still high, as it is in the US and the international market. The UK spend on features that began shooting in the first nine months of 2010 was £936.1 million, the second highest since 2003.

Spend was down £47.1 million compared to Jan-Sept 2009 (£983.2m), but is still £500m higher than the record eight-year low of £442.2 in 2005.

Significantly, the bulk of the activity (£780.1m) was accounted for by inward investment productions, predominantly from US. Worryingly, yet predictably, the value of domestic production declined to £130.3m, a drop of over £40m on last year. The numbers of UK domestic productions is on a slight decline (55 compared to last year’s 69) but that signals that UK producers are struggling with much tighter budgets than in recent years.

This news of course comes in the wake of the Government’s plan to abolish the UK Film Council.

Ed Vaizey’s recent pledge of an increase in Lottery funding and the continuance of the tax credit will be key to ensuring that the UK industry is able to boost the local spend while retaining impressive levels of inward investment.

Inward investment titles shooting in Q3 2010 include Captain America: The First Avenger, War Horse, X-Men:First Class and WE which join the already-reported titles Harry Potter and the Deathly Hallows Part II, John Carter of Mars, and Pirates of the Caribbean: On Stranger Tides.

Domestic UK titles commencing in January to September 2010 included Johnny English Reborn, Burke & Hare, Wuthering Heights, The Awakening and Hunky Dory.

The UKFC’s research sources include industry tracking forums, Skillset, trade press and internet sources, the Office of the British Film Commissioner, UK film certification data and direct approaches to film producers.

Table 1: Number of features produced in the UK, Q1-Q3 2003 to Q1-Q3 2010

Source: UK Film Council

Data for films with budgets over £500k.

Table 2: UK spend of features produced in the UK, Q1-Q3 2003 to Q1-Q3 2010

Source: UK Film Council

Data for films with budgets over £500k.