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

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9.8. Summary Economic Contribution of the UK Film Industry Table 9-2: The value of UK film merchandising in 2006 Sales (£ million) July 2007 Taking into account that some merchandise sales will already be counted in our estimates of the direct impact, we estimate that the core UK film industry generated additional merchandise sales worth around £235 million to UK GDP in 2006. Without a UK film industry, consumers may simply switch some spending to other merchandise associated with non-UK films. However, as shown in Chapter 8 on culture, indigenous British films mean that the UK box office is higher than it would otherwise be if the core UK film industry did not exist. If the effect of UK films on merchandise sales is similar to its effect on box office revenues, then the net impact would be worth about £55 million to UK GDP in 2006. GVA (£ million) Employment (‘000s) Video/DVD sales 135 89 2.5 40 Video/DVD rental 45 38 1.0 15 Soundtracks 5 3 0.1 2 Computer/video games 60 40 1.1 18 Other merchandise 100 65 1.8 30 Total 345 235 6.5 105 Source: Oxford Economics estimates Taxes (£ million) 61
10. Promotion and Trade 10.1. Introduction Economic Contribution of the UK Film Industry July 2007 The film industry also contributes to the UK economy through its impact on UK overseas trade. We can distinguish here between two different channels. The first, direct impact occurs because the core UK film industry earns export royalties and fees for the production of films. But there is also a second, ‘indirect’ effect, because the core UK film industry helps to promote the ‘UK brand’, which in turn helps other UK exporters to sell their products. The rest of this chapter explores both of these points. Key Points • The UK film industry is a significant contributor to the UK net trade position, with export earnings averaging £750 million a year since 2000. • The film industries’ share of total export earnings is higher than the industries’ share in UK GDP - so in this sense it ‘punches above its weight’ in export markets. • Moreover, UK films help to boost the demand for UK products by promoting the ‘UK-brand’. The growing market for product placement in UK films also provides an outlet for exporters to advertise their specific products to a wide audience. These promotional benefits are estimated to be worth around £20 million to UK GDP. 10.2. Direct UK trade in film The film industry is a significant contributor to UK export earnings. In 2005 (the most recent data) total exports of the film industry were £967 million (Chart 10-1). UK film export earnings are comparable to those from software consultancy and accountancy. And, importantly from an economic point of view, the value of film imports in 2005 was only £804 million - so UK film made a healthy net contribution of £163 million to the UK trade position. The average net trade contribution since 2000 is similar to the 2005 figure, at £145 million. The largest contribution to UK film export earnings comes from royalties, which were £660 million in 2005. Production revenues are also important, however, with exports of over £300 million in 2005 (Chart 10-2). Looking at the geographical split of film trade, the UK has a large net trade surplus in film with Australasia/Oceania and with Asia (Chart 10-3). 62
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