The Brexit Factor

Over the past year we’ve all become accustomed to hearing continual arguments about Brexit and whether it’s the right decision for the long term prosperity of the country. Rather than wade in with my own views, which quite frankly none of you care about anyways, I think we’re missing the real question about what steps now need to be taken.

The creative industries have been amongst the fastest growing sector of the British economy over the past few decades, in part due to our involvement in the European Convention on Cinematographic Co-Production and the free movement principle. These have allowed us access to the best talent and funding opportunities which we could not have competed with on our own. In fact, most independent films and several major television series such as Game of Thrones are reliant on these two principles.  Our withdrawal from the European Union raises the question of how this will affect our status as a world leader in the creative industries. I’m not going to pretend I have all the answers, but it’s worth breaking down three key challenges Brexit poses and possible solutions to them.

1)      Free Movement

The Free Movement doctrine has long been a pillar of the EU membership. It’s allowed us to bring in highly skilled crew and cast with the minimum fuss. In fact, our VFX industry is heavily reliant on attracting top European artists. This has long been touted as one of the most contentious issues facing the Brexit negotiations, and in all honesty I think it’s too close to call which way the decision on whether Britain retains this principle will go.

Should we decide against it, then there’s 2 probable outcomes. The first is that productions will lose out on being able to use top European talent as easily. In most cases they’ll no doubt fight to get them the relevant VISA’s so they can be involved, but this will be felt most sharply amongst the smaller independents who won’t have the time or resources to be able to do this.

The second outcome that I suggest most likely to happen is that more and more work will become cloud based, particularly in Post Production, with companies setting up satellite offices across Europe to retain access to talent. Whilst this will allow the companies to remain competitive it ultimately means a loss of jobs and tax for the UK economy.

Many Hollywood productions choose to film in the UK because of our status as global leaders in VFX. It’s a position that we must fight to retain, otherwise there’s a genuine danger that the next major franchise may be shot elsewhere.

2)      Funding

Securing funding has always been tough, but one ray of sunshine has been the European funding bodies. Not only have they provided financing for films, TV and games, but they also crucially support the exhibition sector. Our loss of EU membership for example will have a detrimental effect on films being shown across member states as they’ll no longer qualify for the Europa Cinemas initiative which supports independent films to be shown across Europe.

Again, I suspect that we’ll negotiate to remain a part of the MEDIA program. Its benefits have so far proven to be beneficial for both Britain and the EU as a whole. One area that could see a radical change is how the UK Film Tax Relief is applied. Previously it’s been limited by EU state aid rules which attempt to maintain a parity between members. In the future, we could actually amend the rules. I am personally in favour of revamping the Tax Credit to offer a more generous rate to British independent film. PACT have previously raised the possibility that it should increase from 25% to 40% for independent films with a budget between £2 to 10m. If this were to happen, then it would help to alleviate the pressures on producers and financiers in the face of a collapsing pre-sale market. I personally believe this could help to spark a boom in the independent sector, boosting the number of jobs and helping production companies to plan effectively for the future rather than being forced into reactionary decisions.

3)      Digital Single Market

The Digital Single Market is one of the most controversial policies being debated within the EU. Financing a film or television series has historically been achieved through selling the rights on a territory by territory basis. The DSM threatens this as it works on the basis that once a film or television show is available digitally in one member European country, it would be available everywhere else too. This would be catastrophic for not just the British industry, but every EU member. Distributors would no longer be willing to pre-buy as they’d lose their exclusive rights. In turn, this would make financing a film or television series near impossible, unless you were getting your money from just one source like a Hollywood studio or the major SVOD platforms.

One of the flaws with the DSM is that it’s assumption about “availability” is the same thing as demand. The proposals assume that by making all content available simultaneously it’ll fuel demand. In reality, it takes time, infrastructure and money for a distributor to build demand for each film in order to attract an audience. Each film requires a unique distribution and marketing plan to help it find an audience. Something which can vary tremendously from country to country. In some territories a film may receive a large theatrical release, whilst in others it may be a straight to VOD title. The DSM seriously risks undermining the decades of experience that distributors have built up, by promoting the idea that a product can simply be released across all territories in a quick easy fashion.

I suspect there will also be an unexpected consequence in that certain minority languages could face oblivion. As minority languages they have a limited audience, which means finding the audience in territory takes considerable skill and expertise. The DSM will remove any pre-sale value from such films and television series.