The UK’s video entertainment now accounts for nearly half the revenues of feature films and more than a third of TV series and dramas, as the British production community increasingly relies on the success of video sales to green-light new high-value projects, according to a new study by Oxford Economics.

The study’s findings were released at Insight 360o, an event that brought together key figures from the audio-visual industry, co-funded by the Industry Trust for IP Awareness, British Video Association, Motion Picture Association and British Film Institute.

Out of total feature film revenues of £3.1 billion, 47% came from video sales, 29% from TV licensing and 24% from theatrical box-office. Out of total TV series revenues of £1.9 billion, TV licensing accounted for 66% and video 34%. When it comes to Children’s genre, 70% of total revenues of £1.5 billion came from theatrical box-office, 19% from TV and 11& from video.

DVD provided a very healthy return on investment for film studios. As the largest video market in Europe, the UK’s video industry has therefore been a major contributor to the film business. However, Oxford Economics’ report demonstrates that production of independent film and television drama is even more reliant on video entertainment, and in the case of some independent films, which have difficulty in securing widespread cinema distribution, 70-80% of their revenues are derived from video exploitation.

The case studies below demonstrate the vital contribution made by video entertainment to overall revenues and show why video is more than a support act for British production.

Downton Abbey - Nearly half (46.7%) of the UK revenues for this series were derived from video entertainment. This, in turn, helped to fund production of a second series.

KiDULTHOOD – This 2006 independent film production cost approximately £650,000 to make and earned some £500,000 at its initial cinematic release. However, the sale of some 700,000 copies of the film through video entertainment provided a critical source of revenue for the producers. As a result they received sufficient funding to make a sequel (AdULTHOOD) which was released in 2008.

Video entertainment is also critical to the success of key British TV series in the international marketplace, says Oxford Economics. For example, excluding license fee payments, 50% of the total revenues from Dr Who – one of the BBC’s ‘Superbrands’ – is estimated to come from video sales both in the UK and abroad.

Last year, consumer spending on video entertainment was £2.6 billion, accounting for 24% of the entire audio-visual sector (excluding live sports revenues and merchandising revenues) worth £10.8 billion.

It is the second largest source of leisure spending (excluding TV licence fees and ISP subscriptions). The video industry releases about 8,000 titles a year. Sales of DVDs and Blu-ray discs accounted for 81% of total video entertainment during 2010, Renral accounted for 8% and was exceeded in value for the first time by digital rental, which in 2010 increased to 8.5%. The digital retail segment (electronic sell-through) accounted for 2.9%.

With decreasing physical video revenues and growing piracy-prone online delivery channels, it is critical that the industry be protected by a robust IP framework, it was said. Piracy is estimated to cost the UK’s audio-visual sector over £500 million in lost revenues.

Story filed 07.06.11