Netflix ensures stable UK production revenues

UK TV production sector international revenues grew by 5.3 per cent in the past year and have tripled in the past eight years, the Pact 2016 Census published reveals.

From 2015 to 2016, primary international commissions grew from £430 million (€469m) to £468 million and this was in part driven by commissions from standalone digital services such as Netflix, which commissioned The Crown, War Machine and a new series of Black Mirror.

Growth has also been particularly high in the international sale of UK finished programmes, with an increase of 166 per cent since 2008. Programmes such as Sherlock, Downtown Abbey, Midsummer Murders, have found large followings overseas.

Domestic revenues remain flat

Overall TV production sector revenues remained broadly flat at £2.5 billion, a decrease of 2.9 per cent compared with 2015, due to falling UK commissioning revenues and UK rights income from PSBs. UK commissioning spend fell in 2016 to £1.50 billion, the lowest since 2011, while commissioning revenues from non-PSBs increased by 13 per cent from 2015 to 2016.

Non-PSBs also spent a higher proportion of their commissioning spend on new commissions, with 61 per cent compared with 39 per cent on returning series. This compares to ITV who spent 19 per cent on new commissions in 2016, Channel 5 with 26 per cent and BBC and Channel 4 with 32 per cent.

Share of commissioning spend by company size

The BBC allocated the most spend to smaller producers in 2016 with 38 per cent of its commissioning budget spent with producers with a turnover of less than £10 million. Channel 4’s proportion of spend on smaller producers decreased from 33 per cent in 2015 to 22 per cent in 2016. The prominence of prime-time entertainment formats on ITV and Channel 5 (such as The X Factor and Lip Sync Battle) leads them to working proportionately more with larger producers – ITV spent 57 per cent of its commissioning budget with producers with a turnover of more than £70 million, and Channel 5 spent 56 per cent.

Share of commissioning spend by genre

The proportion of spend on different genres has changed considerably since 2008 with spend on drama nearly halving in value (24 per cent of spend in 2016 compared with 41 per cent in 2008). In comparison, spend on factual entertainment – which includes shows such as The Great British Bake Off, Gogglebox and First Dates – has nearly doubled (13 per cent of spend in 2008 compared with 24 per cent in 2016).

Pact CEO John McVay described UK commissioning revenues as “flat”, adding that the figures still provided “a good solid basis for the UK domestic market” for indies operating here.

McVay said that Brexit had not materially affected the UK TV production sector as yet. “Right now, in terms of the medium term, I don’t see any existential threat to production.” He said that UK indie production remained “a good steady business…the fundamentals of the UK market are pretty strong.”

“It’s encouraging that the world continues to want high quality content of British TV and this important revenue stream enables indies to reinvest back into UK plc,” he added.

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