The U.K.’s Shocking vote to leave the EU could spell bad news for the film industry
By: John Hollywood
Brexit continues to send shockwaves throughout the globe, including Hollywood. As you may recall, last Thursday Great Britain held a vote with results demonstrating a majority of citizens wanting to exit the European Union.
We discussed how the UK’s departure could impact LGBTQ people on the hypertext link.
While the situation continues to remain fluid, many businesses are just starting to ask themselves how the U.K.’s exit will cause an impact – for better or worse.
One particular industry that seems to be very concerned is entertainment (Hollywood). We’ve done a bit of research and consulted with insiders to get the latest buzz.
What follows are 5 ways Brexit could negatively impact the film industry and you as a movie goer.
1. Possibly bad for the box office
According to the Hollywood Reporter, the upside of Brexit is cheaper production. But the downside is a weaker pound, which will have to face a movie industry that has been steadily increasing movie tickets for the past several years.
If ticket inflation continues against a weak Pound, it could have a negative impact on overall ticket sales. See next point.
2. Thrifty spending on tickets
We sometimes forget that movies are often released on a worldwide basis and not just in the U.S. While the numbers are somewhat scattered, current estimates suggest that U.K. residents spend a considerable amount of money on entertainment.
But with Brexit now wreaking havoc on markets, it is logical to assume that some over the pond will be reluctant to cough up money for money for a movie itch. To make up the deficit, will the cost for tix be passed on to others, including moviegoers in the U.S.?
Click on this chart from Statista to see ticket price increases over the years in the U.K. It is hard to imagine Brexit being a good for theaters, consumers or Hollywood.
3. Production money becomes choked off
A quick look at the HWR’s piece reveals that producing films in the U.K. has now become very difficult.
“Brexit's biggest impact on the film industry is likely to be felt by European co-productions. Outside the EU, U.K. productions, or U.S.-led co-productions with British and European partners, will not have access to European film subsidies, such as the MEDIA program, which has invested around $180 million into Brit-based co-productions between 2007 and 2015 for support production and distribution.”
4. A ton of uncertainty
Right now, the U.K. has entered a period of the unknown. We simply have no real idea of the long term consequences of Brexit. What we do know is that in the immediate aftermath of the “leave vote”, the markets haven’t responded kindly.
Like most businesses sectors, the entertainment space likes to know what to expect in the future. When there’s a great deal of uncertainty happening, film makers and producers get scared.
As a result, the movie makers may decide that investing in U.K. related productions are too risky and look elsewhere. That would be a shame because some of the most beautiful landscapes in the world happen to be in the U.K.
5. Tax credit could disappear
Did you know that Britain has a 25% tax credit for international productions? They sure do and it’s been a big draw for film makers here in the U.S. That’s why Disney shot Star Wars: The Force Awakens in the U.K.
What’s problematic here is there are the many unknowns about the continuation of this subsidy because the current arrangement is tied to agreements with the European Union.
It’s possible the tax credits will survive but if the U.K. is starving for cash, it may not be able to afford such generous giveaways to entice Hollywood.
Photo Credit: The Higher Education