The Economic Impact of the UK Film Industry - BFI - British Film ...

Economic Contribution of the UK Film Industry
July 2007
products that cannot reliably be pinpointed as being all due to the film. And, as discussed above, there
are examples where the success of other products (eg books, video games) stimulates the market for a
film, rather than vice versa.
But it is also possible to look at the value of sales generated through merchandising from the other end of
the process, so to speak. Since major film companies have merchandising divisions whose aim is to
generate revenues through licensing others to sell products related to their films, it is also possible to get
an impression of the value of merchandising through its importance to the film distributor.
Film distributors active in the UK typically earn in aggregate about £17 million per year from the sale of
licensed film merchandise in the UK 43 . More generally, discussions with companies in the film industry
suggest that a successful ‘merchandisable’ film might generate sales in the UK of around £50 million in a
year, through perhaps 35 different licensees. Only a limited number of films are suitable for this sort of
treatment, with perhaps six to eight such releases this year. But if two of these are UK films, they might
generate sales in the UK of £100 million. Of course, merchandising is not limited to the year in which a
film is released - sales can continue for a number of years afterwards. But it can become increasingly a
challenge to maintain interest if new films in the same series are not released, and we have therefore
based our calculations on the conservative assumption that the value of merchandising is adequately
illustrated by the first-year effect.
The merchandise revenue estimates in the paragraph above do not include DVDs, soundtracks or
computer games, which therefore need to be added to estimate the overall economic impact of
merchandising based around British films.
Overall, we estimate (Table 9-2) that through these forms of merchandising UK films generated sales of
£345 million in 2006, and value added of £235 million. The employment associated with this contribution
to GDP amounted to around 6,500 jobs, and £105 million of extra tax revenues were generated through
additional VAT, income tax, national insurance contributions and corporation tax.
Merchandising can also have a wider role in promoting the UK. This was acknowledged by the new
Prime Minister on a visit to China in 2005 when he noted that what Chinese school children wanted most
from Britain was more Harry Potter merchandise. He went on to say that Harry Potter is “..one of our
greatest exports, one of our greatest success stories, and I think JK Rowling has done more for literacy
around the world than any single human being" 48 .
43 Source: NPD License Tracker
48 Source: Harry’s magic strikes home, Scotsman, 15 July 2005
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