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27 June, 2022

FDI in film-making: The state of play

FDI in film-making saw a decrease in projects in 2020 as the Covid-19 pandemic hit, but which countries and regions were still receiving foreign investment?

By Sofia Karadima

The Covid-19 pandemic caused overall foreign direct investment (FDI) project numbers to decline by 17.4% in 2020, when compared with 2019 figures. Most sectors were negatively impacted by the virus, and the film-making industry followed the trend. FDI in film-making includes investments in motion picture and television programming, broadcasting, distribution and production.

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Film-making and TV production is seen as a key tool for both investment promotion and the exertion of soft power. For example, the growing popularity of Turkish and South Korean entertainment programmes has resulted in increased interest in the culture, music, fashion, consumer goods and food of these countries. It has also boosted inbound tourist flows. In addition, greenfield investments in new production studios can play a key role in a city’s regeneration and boost investments in areas related to real estate, services and tourism.

However, the Covid-19 pandemic has slowed down the growth of the film-making sector. When it comes to greenfield FDI projects in the motion picture industry, our FDI Projects Database shows that there were 61 projects in 2020 – the year the pandemic was declared – down from 85 the year before, a 28% drop.

Out of 146 film-making FDI projects between 2019 and 2020, the majority (88%) were new projects and the rest were expansions.

What are the leading destinations for FDI in film-making?

Western Europe was the leading region when it came to attracting FDI projects in film-making across 2019 and 2020, with 49% of all projects announced or opened globally over this period.

Asia-Pacific and North America were also popular destinations, representing 14% and 13% of the projects, respectively. Asia-Pacific was the only region to record an increase in FDI projects during this period, attracting 11 projects in 2020, up from 10 in 2019.

The UK ranked as the leading investment destination country for inbound film-making in this two-year period, with a total of 24 projects. The country saw most of its investments come from the US (17 projects).

US-based Big M Entertainment Pictures has opened a new office in the UK that will handle the bulk of the company’s marketing and distribution activities, not only in the UK, but also for the European and Indian markets. Also in 2020, Arts & Sciences, a US-based media and film production company, opened an office in London.

London was ranked first among UK cities in receiving investments in film-making, with a total of eight projects in 2019 and seven in 2020. Other cities that attracted projects during this two-year period include Leeds, Cardiff, Manchester, Edinburgh and Reading.

What are the top film-making FDI business functions?

Film-making FDI tended to focus on sales, administration and marketing in the 2019–20 period. Business and professional services was the second-largest function in terms of inbound projects.

Projects in contact centres went from zero in 2019 to two in 2020, and it was the only business function to record an increase in projects during this period.

Germany was the leading destination for sales, administration and marketing projects, while the US ranked as the top country for outbound projects across all business functions.

Where are the leading film-making investors located?

Our analysis shows that the US was also the leading source market for outbound film-making FDI in the 2019–20 period. Companies from the US invested in 54 projects, targeting domestic operations more than they did in any other country. A total of 17 projects were created in the UK, while projects have also been backed in Germany, Brazil, the Netherlands and Spain.

The UK ranked second for outbound film-making FDI projects, with a total of 19 projects over this period, followed by China and Turkey.

The UK and the US have been the clear winners when it comes to FDI in film-making across 2019 and 2020. Together, they represent 50% of the FDI outflows during this period and 26% of the FDI inflows in the film-making industry. Both countries experienced a drop in projects due to the outbreak of the pandemic; however, the sector looks in a good position to bounce back due to the demand for content from streaming providers such as Amazon Prime, Netflix, and Disney+.

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