The Decline of the British Film Industry: an Analysis of Market Structure, the Firm and Product Competition
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The decline of the British film Industry: an analysis of market structure, the firm and product competition. A thesis submitted for the degree of Doctor of Philosophy By Stephen Romer Brunel University Department of Economics 1993 For John Carrol Romer and Dorothy Romer ACKNOWLEDGEMENTS I would like to thank Dr. David Burningham and Dr. Peter Swann of the Department of Economics at Brunel University for their careful supervision and for their tactful advice. CONTENTS Page Index to Tables and Figures 3 Chapter 1. Introduction to the Thesis 6 List of Interviewees 15 Chapter 2. An Overview of the British Film Industry 16 2.1 Demand Profile 17 2.2 The Industry's Output 36 2.3 The Structure of the Industry 56 2.4 Government Policy 68 Chapter 3. The Problems of the Industry 84 3.1 An Environment of Decline 85 3.2 The New Wave 112 3.3 The Performance of the Duopolists 127 3.4 Contemporary Case Studies 164 3.5 Structure, Conduct, Performance 182 Chapter 4. The Firm 199 4.1 Sources of Finance 200 -1- 4.2 The Financing Process, Risk and Film Investment 226 4.3 The Structure and Control of Production Costs 250 4.4 Surveys of Production Costs 274 4.5 The Economics of the Firm 291 Chapter 5. Product Competition 314 5.1 Background 315 5.2 Clustering Analysis 1: Genre, Budget and Censorship Certification 326 5.3 Clustering Analysis 2: Nostalgic and Literary Attributes in the 1980s 344 5.4 Clustering Analysis 3: Nostalgic and Literary Attributes in the Post War Period 361 5.5 The Economics of Product Competition 378 Chapter 6. Conclusions 388 Appendix 399 Bibliography 402 -2- INDEX TO TABLES AND FIGURES TABLE TITLE PAGE 1 Cinemas, Cinema Going and Box Office Takings, 1945 to 1984. 19 2 Cinema Amissions in Great Britain, USA, and Western Europe, 1955 to 1981. 21 3 Index Numbers - Gross Box Office Takings and the Price of Admissions, 1955 to 1981. 23 4 Cinema Admissions and Television Licences in Britain. 1950s. 25 5 Household Expenditure on Entertainments. 30 6 The Independent Sector of British Film Exhibition, 1983. 34 7 Long Films Registered For Cinema Exhibition in Great Britain, 1955 to 1981 39 8 US Majors: Production of Feature Films in Britain, 1946 to 1970. 48 9 Imported Capital For Film Production By British Subsidiaries of the Major American Film Companies. 51 10 The British Screen Quota. 73 11(a) The NFFC and British Long Film Production. 75 11(b) The NFFC and British Long Film Production: Quinquennial Analysis and Standard Deviations. 76 12(a) The Eady Levy Rate Per Cinema Seat. 78 12(b) The Distribution of the Eady Levy. 81 13 Total Number of Feature Films For Theatrical Release Commencing Principal Photography in the UK in the Nineteen Eighties. 92 14 The Composition of Output in 1987: Feature Films For Theatrical Release Commencing Principal Photography in the UK in 1987. 94 15 Numbers of Films Produced and Market Shares of British Production, 1946 to 1970. 130 16 The Rank Production Empire: The Numbers of Films Produced By Production Companies Associated With Rank, 1946 to 1970. 140-1 17(a) Major Minors: Numbers of Films Made By Production Companies Not Associatdd With Rank and Making at Least Three Films in any One Year, 1946 to 1970. [Long films only. ] 155 17(b) As 17 (a). 159 17(c) As 17 (a). 160 18 Summary of Structure, Conduct and Performance of the British Film Industry. 183-4 19 Channel Four/British Screen Finance in Low -3- and Medium Budget Film Production, 1981 to 1989. 203 20(a) The Structure of Production Costs: Above the Line Costs, Average Percentage of Total Budget of 30 British Films, 1986 to 1989. 252 20(b) The Structure of Production Costs: Below the Line Costs, Average Percentage of Total Budget of 30 British Films, 1986 to 1989. 255-6 20(c) The Structure of Production Costs: Indirect Costs, Average Percentage of Total Budget of 30 British Films, 1986 to 1989. 259 21 Component Costs of Production, 1946 to 1948. 276 22 Component Costs of Production, 1986 to 1989. 278 23 Budget Analysis of Fifteen British First Features. (X) 282-3 24 Analysis of Production Costs By Decade. (%) 285 25 The 1980s: British Firms in the Production of More than 10 Films During the Decade 310 26 American and British Releases by Subject Category. (%) 321 27 1980 to 1989: British Films Released For Exhibition in Britain. Location of Product Characteristics in the Decade as a Whole. 328 28 1980 to 1989: The Top Ten Box Office Films in Britain and British Films Released For Exhibition in Britain. Location of Product Characteristics in the Decade as a Whole. 331 29 1980 to 1989: The Top Ten Box Office Films in Britain, and All British Films Released For Exhibition in Britain. Location of Product Characteristics, Year By Year. 336-4Z 30 Literary and Nostalgic Attributes of American and British Films Released For Exhibition in Britain, 1980 to 1989. 348-52- 31 Summary: Proportion of Total British and American Output Originated For the Cinema or Based on Pre-existing Works 354 32 The Literary and Nostalgic Characteristics of British and American Films Released For Exhibition in Britain During the 1980s and the Rate of Box Office Success. 358 33 The Literary and Nostalgic Attributes of British Films Released For Exhibition in Britain in the 1980s, and the Location of the Annual Top Ten Films at the British Box Office 363 34 The Literary Origins and the Nostalgic -4- Content of Post-War British Film Releases and of the Most Successful Films at the American Box Off ice. (By decade) 34 (a) The 1940s: 1946 to 1949. 365 34 (b) The 1950s: 1950 to 1959. 367-8 34 (c) The 1960s: 1960 to 1969. 371-2 34 (d) The 1970s: 1970 to 1979. 374-5 35 British Long Films By Genre, 1927 to 1948. 399-401 Figures 1 The Emerging Industry Structure: The Combines - Maxwell's ABPC, the Ostrers' GBPC, and Rank. 57 2 The Rank 'Empire, ' 1934 to 1948.128 3 Association of American and British Releases By Subject Category, 1935 to 1975.323 -5- CHAPTER ONE INTRODUCTION TO THE THESIS In considering 'The Decline of the British Film Industry, ' it is useful to identify six basic issues: 1. the role of the British majors. 2. the presence of the Hollywood majors in Britain. 3. the film policy of British governments. 4. the availability of finance for independent production. 5. the nature of costs of production. 6. the characteristics of British films as products. For the student of the industry, these are the perennial issues of concern. The nature of these factors is established in Chapter Two which is an introductory 'Overview' of the British film industry taking the form of a historical narrative concentrating on the twenty five years following the war. The essential decline of the industry can be observed within this period. In the 1940s, both the exhibition and the production of films in Britain were at their respective peaks. -6- These levels were rapidly eroded over the following two decades. Section 2.1 of the Overview considers demand in the cinema exhibition sector and the other sections of the chapter look at the output of the industry, the emergence of the British major studios - vertically integrated across exhibition, distribution and production sectors - and their subsequent decline, and the nature of British government film industry policy. Section 2.2 refers to the crucial role in the economics of the film industry in general of the distribution sector. Lack of access to distribution has been one of the 'Problems of the Industry, ' which are the subject of Chapter Three. Section 3.1 includes a case study of Goldcrest which further emphasises the importance of distribution. The case study approach is employed frequently in Chapter Three. Section 3.2, for example, consists of a case study of the 'New Wave' of British film making of the late 1950s, and in Section 3.4 'Contemporary Case Studies' are adduced. Although the most basic observations about the industry are that it is permanently in a state of crisis and that each crisis is worse than the previous one, the case of the New Wave makes it clear that the concept 'British Film Industry' is not somehow a contradiction in terms. The Contemporary Case Studies identify the characteristics of costs of production and of film finance. The problems imposed on British film makers by cost and finance constraints -7- are explored through the medium of four recent British film projects. Information has been obtained through interviews with leading participants. And, more generally in the thesis, interviews have been a major part of the research method. A list of interviewees is on page 15. It must be noted that the interview method in research is an imperfect one. This is particularly so for film industry research where the quality of response is inhibited in some cases by the tendency of some practitioners to circumspection. Moreover, there are real limitations in terms of the availability of respondents for a historical area such as the rise and fall of the British majors. The British film industry is an area which is well known for its lack of statistical information. Sometimes it has been possible in writing this thesis to use data by adapting various existing sources, particularly Gifford's invaluable 'British Film Catalogue, 1895 to 1985' (1986). Moreover, numerous compendious 'Film Guides' have been published following the original model of Halliwell (1977). Much data has been shaped from these guides generally, but Halliwell in its 8th.