RESEARCH: BUSINESS OF FILM

What is the cultural value of film?

An economist named David Throsby bases his point of view on a definition of value that encompasses cultural value.

Studies on cultural impact of films have shown how films apart from being popular leisure activities, carry very powerful and political messages for the audience/viewers, presents insights of other cultures and also our own culture too.








What film matters to the economy/Why is it important?


The graph to the left displays the amount of money the UK have spent on the production of feature films over the last 20 years.

As everyone knows, the Film industry matters hugely to the economy as it is entertainment which interacts with the audience. In the UK, film was the first creative industry to be supported by film incentives in recognition of its importance.

Approximately £840 million of tourism spending by overseas visitors can be attributed to film-induced tourism. Film is often regarded as a driver of the other creative industries, in that it is high profile and often makes use of the highest design and creative skills.

The UK make many independent films due to Curzon cinemas. They are identified as British films. For example, Paddington, The Imitation Game and The Inbetweeners.

On the other hand, the UK films only took 16% of the box office takings in 2014. As the UK make many independent films, there is no large British film production or distribution company based in the UK. Like most other countries in Europe and considerably around the world, the American films take all of the money from the Box Office because they have bigger production and distribution companies than any other country including the UK.


The benefits of inward investment
Alongside the BFI Film Fund, there are 2 other important public organisations that provide support and stability to British Independent Film Industry. The following are the organisations: BBC Films (main part of the BBC) and Film 4 which links with Channel 4.


Thinking about the value chain

In the film industry, the term ‘value chain’ is used to describe the series of steps.

To the left, is the image of 'Main stages'. The main stages of the film value chain are: Distribution, Concept Origination, Development, Finance, Creative Packaging, Production, Exploitation which will be explained later on.

In general, the film producer is the one filmmaker that accompanies the film on its entire journey through the value chain until it is safely in the hands of the distributors.

The Film Business value chain

Development is the first step where people come together and produce ideas which is a crucial part of the process (value chain) as it all starts here.

Finance for big companies like Universal Studios in America for example have no problem with this as they have the money to fund for their own films however the independent film making companies (such as, in the UK) mainly struggle as they haven't got the funds which is a big concern.

Pre-pre-production (Pre-prep) is the preparation before the production process. This stage is concerning for some films being created as some have tight time frames.

The film is not yet officially financed. However, money needs to be spent in order to secure key cast and crew, and start to find locations, and so forth. Someone needs to fund pre-prep, but this is a highly risky investment, because the film might collapse at the last minute.

Production has it's uncertainties and high risks however known to be the simplest stage in some respects because of the difficulties with the others. It is divided into pre-production, the official ‘prep’ period, principal photography, when the camera is rolling, and post-production when the editing and sound and visual effects (VFX) and music aspects are incorporated.

Distribution is the process of getting the film into the hands of the theatre chains, broadcasters, video stores and video on demand (VoD) operators; The companies that do this are called the Distributors.

Exploitation is the process by which consumers actually experience the film (films are screened in cinemas and other platforms that may be recreational or not). Furthermore, films are being more and more consumed in different ways with the growing importance of digital technologies.

What happens along the value chain?

Development - Secure Rights, Hire Director, Option Agreement, Hire Casting Director, Secure - Development Finance, Preliminary Budget, Secure Key Cast, Secure pre-sales, Hire Writer. 
Finance - Broadcast License, Certify as British, Prepare Estimates. 
Production - Pre-production, Principal Photography, Post-Production. 
Distribution - Video/DVD/VoD licensing, Cinema Exhibition. 
Concept Origination - Find Ideas. 
Exploitation - Download to Own, DVD Rental and Sales. 
Creative Packaging - Marketing Campaign.