Independent film producers have suffered badly in the downturn, despite the resilience of the wider industry, with a third more going bust than their counterparts in either TV or radio.
PricewaterhouseCoopers found that 50 small film companies have collapsed in the past 18 months, hitting a low point last winter – when 13 went into liquidation. Companies including Palm Tree UK, Grass Roots Films and 525 Productions all folded in the past year.
Nick George, media partner at PricewaterhouseCoopers, said: "The industry has been fairly resilient, but the financing risk is hitting independent film makers hard, and the result is an increase in insolvencies." This comes despite a rise in the number of cinema goers, while filmed entertainment in the UK has raked in $6.6bn so far this year – making it the largest market in Europe, the Middle East and Africa.
In each of the previous economic downtowns, the number of films produced has fallen sharply, according to the Motion Picture Association of America, but cinema going remains resilient.
"It is a production and financing issue. In harder times, films struggle to secure financing, and with the credit crunch leading to recession, 2008 was no different," said Mr George.
Independent companies have increasingly sought funding from diverse sources, such as wealthy individuals and hedge funds, but in many cases these have dried up.
Larger film companies can rely on a series of blockbuster productions, and support from parent companies, but smaller companies often depend on the success of one movie. "The rate of insolvency in this industry is a direct result of these films not making it to the big screen," said Mr George.
Box office admissions rose in 2008 over the previous year, and are expected to rise a further 1.1 per cent in 2009.
"This can be accounted for by a strong blockbuster presence in 2008, as a second consecutive rainy summer in the UK brought people to the movies," he said.
Mr George added that there is a growing appetite for independent films, and with the growth of digital formats, these are becoming cheaper to make. "This will allow new releases to be available in more theatres than is currently feasible.
"The credit crunch has made fundraising tougher for independent film makers but things move in cycles, and the success of non-mainstream films like Juno and Slumdog Millionaire demonstrates a strong appetite for original, creative work, so in time we ought to see investors returning," he said.Reuse content