Select Committee on Culture, Media and Sport Minutes of Evidence


ANNEX 1

  According to PriceWaterhouseCoopers, the worldwide consumer spend on all media and entertainment is forecast to reach $1,400 billion by 2006. In 2001, the worldwide consumer spend on filmed entertainment alone was $59 billion. The current compound annual rate of growth in filmed entertainment is about 5.7%.

  At the start of last year in the UK, 94% of the population aged between 25 and 44 had a VCR, 84% had Teletext, 50% had stereo television, 50% had a personal computer, 45% had access to the Internet, 35% had satellite television, 27% had widescreen television, 26% had a DVD player and 22% had cable TV.

  The growth in these revenue sources is important because they fuel continued investment in film and related audio-visual industries. It is against this background of explosive growth across the media and communications industries that we should view British films.

FILM PRODUCTION

  UK film production has returned to relatively good health, having recovered from the catastrophic collapse of 1992 and 1993. In those two years, only 70 productions were made in the UK, with total investment of £257 million, of which 72% was provided by overseas companies investing in the UK. In the last five years £2.73 billion has been invested in UK production, of which £1.7 billion, or 62%, has been provided by overseas investors. Those funds were invested in 482 productions, of which 157, or 33%, were overseas productions shooting in the UK.

  On average, each of the last five years has seen £546 million (of which £339 million has come from overseas) invested in 97 productions (of which 31 originate from overseas). The British Film Commission estimates that 70% of overseas investment comes from the USA, the bulk of it from the member companies of the MPA.

CINEMA EXHIBITION

  Cinema admissions continue to rise. 156 million tickets were sold in 2001, an increase of 9.4% on the previous year. With a gross box-office in excess of $1 billion, the UK was the third-largest market in the world, after the USA and Japan. By the end of 2001, the UK accounted for 7.1% of the world box-office, compared with France's 6.1%, Germany's 6% and Italy's 3.7%.

  An even bigger jump was recorded last year, when, according to the CEA, 176,000,000 tickets were sold. The UK now boasts just under three admissions per head per year (up from fewer than one per head in the mid-1980s).

  Thanks to a massive programme of investment, there are now 3,248 cinema screens in the UK, compared with 1,789 in 1991. Much of that investment was provided by MPA member companies.

FILM DISTRIBUTION

  Momentum and Helkon have joined the ranks of UK distributors alongside Entertainment Film Distributors, which has enjoyed outstanding success, partly thanks to product supplied by subsidiaries of MPA member companies. Last year, Entertainment achieved a market-share of 16.7%, making it the number two distributor in the country. Despite the demise of Film Four Distributors, UK film distribution presents a very healthy picture, especially for new independent companies.

  Throughout the world, local films are gradually capturing a larger share of a growing box-office. Although the share of the local box-office taken by British films fell from an outstanding 21.2% in 2000 to 11.7% in 2001, the latter is still a creditable figure. It is often said that Britain is hamstrung by sharing a common language with Hollywood, which makes the UK vulnerable to domination by bigger-budgeted and more commercial American movies. However, this observation could just as easily be turned on its head and the common language seen as an opportunity. Certainly, the examples of Harry Potter and James Bond, at one level, and, say, Billy Elliott, Bridget Jones and About a Boy, at another, demonstrate that the world market can and will embrace commercial British films.

VIDEO AND DVD

  In 2001, an astonishing 122 million video and DVD units were sold in the UK, an increase of 18% on the previous year. DVD accounted for 38 million of those units, and increase over the previous year of 127%. (By the end of 2001, there were three million DVD players in the UK, representing 12% of TV households.) The BVA estimates that the total value of DVD hardware and software in 2001 was £2 billion, an increase of 35% on the previous year.

  At the end of 2001, the UK accounted for 33.5% of all European VHS sales (France came second with 17.8%) and 34.3% of all European sales of DVDs (France again in second place with 22.6%). The incredible strength of the UK video and DVD market is a factor on which British film-makers should be able to capitalise.

TELEVISION

  UK broadcasters spent £4.3 billion on programming in 2001, more per head of population than is spent in the USA. Partly as a consequence, the UK was again the world's second largest exporter of programmes after the USA, with sales of £430 million in 2001.

DIGITAL TELEVISION

  The UK has the highest digital TV penetration in Europe, with 37% of households connected. The rate of growth in the UK has accelerated, with 5.7 million digital homes connected in 2001, compared with three million in France, 2.1 million in Italy, two million in Spain and 1.4 million in Germany.

DIGITAL CINEMA

  Digital cinema is in its infancy and the UK is playing a very constructive role. The bfi is creating a digital testbed at the National Film Theatre and Odeon has created its own experimental venture in its flagship cinema in Leicester Square.

SATELLITE AND CABLE HOMES

  The huge investment in satellite and cable services has resulted in 3.6 million cable homes and more than five million satellite homes in the UK, all of them receiving multi-channel television and the vast majority of them now receiving interactive, digital services.

INTERNET ACCESS

  By February 2002, 11 million households, representing 45% of the population, were connected to the internet. This represented a very significant increase from the 30% figure achieved the previous year.

BROADBAND TAKE UP

  Flat rate offers from BT, AOL, Freeserve and Telewest, among others, have led to an explosive growth in broadband take-up in the UK. By October 2002, the number of broadband connections had jumped to more than one million. BT recently announced that it is signing up 25,000 broadband subscribers every week and it now claims to have 650,000 in total. A recent article in The Sunday Times (16 February 2003) reported that there were now 1.5 million broadband homes and businesses in the UK.

CONSOLE GAMES

  The electronic games market in Britain exceeded £1 billion in 2001, overtaking the value of the cinema box-office. Very significantly, Britain is a powerhouse for games development, with an enviable pool of creative talent supplying games to publishers all over the world.

MOBILE COMMUNICATIONS

  Mobile telephony is not yet a significant factor in entertainment, but it is expected to play an increasing role with the advent of the next generation of equipment and services, which will bring interactive entertainment content. 78.3% of the UK population subscribed to mobile services at the end of 2001, compared with 60.5% in France.

  The worlds of Internet, broadband, console games and mobile communications are part of the emerging fabric of tomorrow's content industries and they will play an increasingly important part—creatively, as means of distribution and as platforms for marketing—in the audio-visual sector. As such, they have tremendous potential for creating further employment and extending the skills of the UK's interrelated entertainment industries, of which film is a key part.



 
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Prepared 18 September 2003