Independent Film Business in U.K. Heading for Market Failure, Says Producers Body

The U.K.s independent film sector is heading for market failure due to industry conditions and inflation, producers body Pact has said. Pact, which represents a range of indie production companies, made the alarming assessment in a response to the U.K. governments consultation on film and high-end TV.

The U.K.’s independent film sector is heading for “market failure” due to industry conditions and inflation, producers body Pact has said.

Pact, which represents a range of indie production companies, made the alarming assessment in a response to the U.K. government’s consultation on film and high-end TV.

“The U.K.’s independent film sector is struggling and is now at the point of market failure,” the trade body said in their written evidence to the government’s Department of Culture, Media and Sport, who have organized the consultation. “Challenging market conditions, increased cost of talent and crew and changing viewing habits have made it increasingly difficult for indie films to compete with HETV [high-end TV] and big budget U.S. Studio films.”

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Pact continued that “without urgent Government intervention the sector will no longer be viable, impacting the talent pipeline and jobs across the indie film sector and the wider audiovisual economy.”

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The decline in indie films, they say, is a result of difficulty in securing finance and the “slow return” of audiences to cinemas. They propose upping tax relief to 40% for films with a budget of between £1 million and £15 million to help the sector.

Pact are among a number of U.K. screen industry stakeholders who have contributed evidence to the consultation.

Paramount echoed Pact’s concern for independent filmmaking, saying in its written evidence that they are “acutely aware that smaller films struggle for funding. This is coupled with challenges from increased costs, access to talent and changing viewer habits.” The studio added it supported Pact’s suggestion of an increased tax rate.

U.K. broadcaster Channel 4, which also runs a feature film division called Film4, said that streaming platforms were also creating a more challenging environment for indie projects because they have “deeper pockets” and aren’t as affected by rising talent and crew wage costs. As well as supporting an increased tax rate for indie productions, Film4 suggested increased support for indie film sales and distribution, such as axing VAT on exhibition, as well as “increased obligations on streamers to support more U.K. independent film.”

Studios contributing written evidence to the consultation also touched on a range of other issues including AI, exhibition windows (Warner Bros. Discovery suggest doing away with the legislated two week maximum) and a change in HMRC practices, including rejecting production fees and a new definition of “connected parties” that has eroded some of the U.K.’s film and high-end TV tax reliefs.

A number of stakeholders pointed out that while the U.K.’s production sector is currently booming, there is increasing competition across the globe to attract film and TV makers.

“The production landscape is hypercompetitive, with jurisdictions continually looking for ways to attract high end TV and film productions,” Amazon said. “Short term policy changes or additional costs to doing business could see an immediate impact on productions moving away from the U.K., and at short notice.”

U.K.-founded production company Fulwell 73, who make shows including “The Kardashians,” added: “The industry is at an inflexion point. Rapid growth is expected for HETV in the next few years, but that production does not need to be based in the U.K. The industry could be a ten-billion-pound U.K. success story in the next few years, or it could rapidly decline as our competitors improve their offer – what we do now will determine which road we take.”

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