According to Broadcast Intelligence's inaugural UK Production Trends report, the spend on drama has grown on an average of £916,000 in 2013 to £1.29m in 2017, registering an average rise of 9% per year.
The s
pend on drama, driven by SVoD as well as the linear broadcasters, has outpaced the growth of every other genre on a per hour basis in the UK. According to Broadcast Intelligence’s inaugural UK Production Trends report, it leapt from an average of £916,000 in 2013 to £1.29m in 2017, registering an average rise of 9% per year.
The top line results indicate strong market growth; 2017 saw 7% growth year-on-year, while the five-year period from 2013 to 2017 saw slightly faster growth at a 7.4% CAGR.
The average revenue for an hour of drama has increased by one-third over five years, helping to drive 2017s production sector revenue to £3.5bn. While per-hour costs have remained largely flat, hours have soared, increasing total revenues by two-thirds over the same period.
Speaking about the growth parameters, Jonathan Broughton, Lead Analyst at MBI said: UK production is booming and will continue to do so over the next few years. Both domestic and international sources are contributing, but we see strongest growth coming from the US and the FAANGs in particular.
International revenues have provided a boost to the industry; funding from international commissions has reached just under £1bn and represents 32% of total revenues generated by UK companies.
The influx of revenue has also caused a flurry of investment activity. Deals are at a five-year high, with 43 separate investments in production companies across 2017 alone. Spiralling drama budgets are one reason behind the level of M&A activity in the genre.
While the influx of international finance, and SVoD funding in particular, has been called out by some as a possible bubble, data obtained by media research firm Broadcast Intelligence suggests that overall international funding will continue to grow for the next few years. Many groups have now re-positioned themselves to create permanent relationships and it is likely that increased SVoD competition should enhance overall original spending, rather than supress it.
Despite the budget boom, many sectors of the industry have remained consistent across the five-year period. Scripted accounts for 30% of indie sector revenue, excluding BBC Studios and ITV Studios, which is up from 28% in 2017. Unscripted programming – factual, factual entertainment and entertainment combined continues to dominate, generating almost half (48%) of revenue, compared to 52% in 2013.
Both average tariffs and the volume of shows commissioned have expanded as broadcasters scramble to order more high-volume, low-cost content to offset the expense of costly, short-lived dramas. Average tariffs have increase at around 7.2% per year to reach £118,400 in 2017, while volume is up 9% over the five-year period from 2013 to 2017.
As more of the limited commissioning budgets is poured into fewer drama hours, less money has to fill more slots in the schedule and factual is the prime candidate to fill that gap, said Broughton.
Factual programming accounted for 22% of revenue, up from 17% in 2013. If it continues to grow at a comparable rate, factual programming will overtake drama revenue within two years.
The authors note that the bulk of producers (67%) generate considerably less than £200,000 per hour for factual content, with 32% paid less than £100,000.
The relative size of the SVoD operators budgets is laid bare by Broadcast Intelligence data suggesting that in 2017 they were responsible for just 3% of commissioned hours across all genres internationally despite generating 15% of international revenue.
Finally, the current downturn in the pound plays to the industrys advantage. Losing roughly 15% of its value against the dollar over the past three years, UK production companies are now more competitive than ever, and dollar commissions are worth slightly more.
