A hundred years of investing in Scottish film

On Monday night ‘from an original idea by Mark Millar‘  the First Minister Alex Salmond and Culture Culture Fiona Hyslop and a crowd of potential film investors gathered in Glasgow to hear Claire Mundell and Peter Nichols explain the investment opportunities created by the new MacKendrick Fund.  I was asked to provide some context about the Scottish film industry so here are some excerpts:

“We’ve been making feature films in Scotland for almost exactly a hundred years now.  The first of six film versions of Rob Roy was made here in Glasgow in 1911 in a small studio in Rouken Glen. It was a hit not just at home but around the world. Sadly however the production company behind the 1911 Rob Roy filed for bankruptcy just a year or so later which is perhaps a salutary reminder that one hit doesn’t guarantee future success. 

In the intervening hundred years there have been several attempts to kick start a Scottish film industry, but it wasn’t until the 1980s, following Bill Forsyth’s success with Gregory’s Girlthat we saw a concerted effort to promote Scottish film with the creation of the Scottish Film Production Fund, launched with a very modest £80,000 budget and in the middle of a recession. … [W]e have seen growing levels of investment, both from public (thanks in particular to the National Lottery) and from film industry sources.  But the level of film investment isn’t yet quite enough to secure the real prize which is a critical mass of feature production and a sustainable, profitable, diversified screen industry. Yet that prize is within our grasp if we can achieve the right mix of locally produced films and incoming productions, a decent share of television drama production and, perhaps before too long, the means to offer tax and other incentives. 

So it’s a very important sign of the growing credibility of Scottish film, and of entrepreneurial producers like Claire [Mundell] and the partnership she has forged with Presience and with Creative Scotland, that the MacKendrick Fund has been established … Now of course that’s not to say there aren’t risks investing in film.  Far from it – films themselves are inherently high-risk, the majority of films are unprofitable, the majority of revenues and the vast majority of profits come from a minority of the titles released.  But as with other high risk investments, fortune favours the brave and the smart.  The key to success is spreading and sharing those risks, taking a long rather than a short term view, looking not just at individual films, but at baskets of films and at film businesses.

 In my view the biggest economic challenge facing Scottish film, and by extension prospective investors, is that we simply don’t make enough movies to ensure the hits come frequently enough to offset those that don’t quite hit the spot.

If you look at similar sized countries across Europe, compared to our yearly handful they produce between twelve and twenty five movies annually. As a result they see box office revenues alone ranging from 40 to 200 million pounds a year just in their domestic territories and a market share as high as 25%.  (And of course box office receipts typically account for less than a quarter of a film’s total revenues.)  But what’s equally important to note is that statistically their films are no more likely to be hits than ours.  The ratioof hits to misses is actually remarkably consistent in nearly every territory, regardless of the size of the industry. 

That said last year UK production investment actually dipped by 9% and the number of productions dropped by over a third.  Now while this is undoubtedly a concern it also presents a golden opportunity for producers and investors in Scotland.  Because if we can increase production levels here from the single figures typical of the past decade to something closer to the levels of other small countries, then we are much more likely to produce the hits that can attract audiences, generate real returns for investors, and deliver the sustainable industry that we all want to invest in.

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