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SPI Report for PACT April 2010

SPI Report for PACT April 2010

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Published by Dilupa Tharaka

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Published by: Dilupa Tharaka on Oct 16, 2010
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A New Business Model for UK Film ProducersApril 2010
The fundamental concept behind our proposals is thatcontent creators would retain substantial ownership ofintellectual property and have greater access to revenuesfrom the films they create. This will lead to strong,entrepreneurial businesses than can attract outside financeand become the bedrock for the growth of the sector.The adjustments we suggest are simple and cost-neutral.This is not about seeking more funds. It is concerned withusing what is already on the table to create organic growth:growth that is based upon success rather than subsidy.In our vision, the public entities which have been sosupportive of the sector will continue their activities, buttheir objective will include empowerment of independentfilm companies rather than intervention on the sector’sbehalf. Responsibility and motivation for building asustainable film ecology will be handled within filmbusinesses instead of public agencies.The public policy objectives for film will be moresuccessfully met than is the case today. The cultural aimsthat underpin UK policy will continue to be fundamental tothe sector’s development. There will be more avenues fornew and diverse voices. The UK is globally recognised as asource of new and established talent and we need a thrivingsector that can secure that talent’s future here in the UK.It is vital that these changes happen now so that contentcreators are in a position to take advantage of the digitalrevolution, where disruptive technologies have changedconsumer behaviour and are creating new ways of reachingaudiences. This disintermediation will allow content creatorsto move up the value chain by having more directrelationships with their customers, but opportunities will bemissed unless film businesses have the financial strengthto serve as a platform for this expansion.Our measures avoid the ‘quick fix’ philosophy that hasbeen tried before to address sustainability using imposedrather than organic solutions. Sometimes it is better to havea ‘good’ idea than a ‘big’ idea, and Pact believes this reportis filled with good ideas – that will work.
John McVay
London, April 2010
We at Pact believe there is a unique opportunity to createa new strategy for the public funding of UK film productionthat could, at last, foster the kind of ‘sustainable’ film sectorthat has for so long been a goal of public policy.
by John McVay, Chief Executive, Pact
Report prepared by the creative industriesconsultancy Olsberg|SPI.Olsberg|SPI, 4 Junction Mews, London W2 1PNT: + 44 20 7402 1300 • F: + 44 20 7402 6111info@o-spi.com • www.o-spi.com
A new business model for UK film producersApril 2010
Table of contents
1Introduction to the report42A new concept for developing world classUK film businesses6
2.1The vision62.2The Pact proposals in summary82.3Advantages for the public sector8
3The talent and capabilities exist:now the system needs to change9
3.1Current obstacles to growth of UK filmproduction businesses93.2The competitive disadvantage faced byUK producers103.3The financial weakness of UK producers10
4Responsibility for sector growth11
4.1Empowerment114.2Taking advantage of the distributionparadigm shift114.3Achieving growth124.4A wider range of films12
5Protecting cultural filmmaking/developing new and diverse talent136The resulting scenario14
6.1Celebrating and safeguarding ourfilm culture146.2Assisting our film industry146.3Nurturing our film talent14
Appendix 1The Pact proposals in detail15
A1.1100%/recycled15A1.2The film depository receipt system16A1.3Tax credit as producersequity16A1.4Terms of Trade with public servicebroadcasters17A1.5Containment of legal and finance costs17A1.6Higher rate of tax relief for low budgetfilms17
Appendix 2Public sector financial support measuresfor UK film18
A2.1Key public financiers and financial supportmeasures 2007818A2.2Reduced funding environment18
Appendix 3International comparison – public agenciesand broadcaster financing19
A3.1Summary of international analysis19A3.2Details of international comparison21A3.3Comparing international revenue models26
Appendix 4Regulatory Issues27
A4.1State aid issues27A4.2Lottery issues28
Appendix 5About Pact29

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