Netflix has increased its spend on UK productions by 50% to $1 billion in 2020. UK content has proven to be exportable, and the tech giant has demonstrated just how important the UK is in its future production plans.

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Global video giant Netflix has increased its content spend on UK productions by 50% to £750 million ($1 billion) in 2020. UK content has proven itself to be exportable following from the success of key titles among Netflix’s large original titles slate in 2019, and the tech giant has demonstrated just how important the UK is in its future production plans.

The UK content industry has gone from strength to strength, and continues to flourish as a key production hub globally. 2019 saw the highest ever spend on film and high-end television productions in the UK according to the British Film Institute (BFI), showcasing the strong talent the UK offers both on- and off-screen. Inward investment has been critical to this growth in production spend, as it exceeded the £3 billion mark for the first time, of which £1.3 billion was spent on high-end TV shows and £1.8 million on films.

Netflix has signaled the importance of UK content and the talent within over the past years through a series of investments, including its highly acclaimed original series The Crown, one of Netflix’s more expensive titles reportedly costing $10 million per episode. In 2019, it opened a production hub at Shepperton Studios which has quickly become its most important production location outside of the US. In the past months, it has also increased the number of employees in its London headquarters, whereas its previous EMEA focus was from Amsterdam. The UK arguably has some of the world’s top creatives which has attracted significant investment for decades—in 2019, Netflix signed exclusive deals with UK creatives and invested in training programs to support future talent.

Although this influx of investment and demand for creatives from Hollywood Studios and tech giants can put pressure on local broadcasters, investment in the creative industry leads to positive net outcomes, particularly in people development and its contribution to the economy. The increased spend on film and TV productions in the UK didn’t just come from the US; the BFI reports an increase in inward investment from Indian productions in 2019, another significant TV & film industry globally. Despite a huge impact on the cinema market from COVID-19, the UK has invested in further positioning itself as a production hub with studios to open in Greater London and Liverpool.

Another key driver of content investment into the UK has come from generous tax incentives; 2013 saw the introduction of a tax relief of up to 25% for qualifying productions. Although labelled as a “cultural test,” productions can also gain points for contribution and involvement from British talent and do not necessarily have to be set in Britain to qualify. The rise of global online video players has meant content needs to be exportable on a global basis; other than large Hollywood titles, regional content from the UK has often struggled to see success globally. Netflix’s increased investment and risk in content set in and showcasing British culture has paid off in recent years, including the international success of Netflix’s Sex Education, The Crown, and Top Boy.

Streaming services play an increasingly important role in production spend globally as content becomes easier to sell and to make its way to audiences around the world. As content becomes more accessible to viewers globally, and the production process becomes increasingly digitized, the UK content industry will continue to be a key growth sector in the economy.

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Author

Fateha Begum, Principal Analyst, TV, Video and Addressable Consumer Devices

askananalyst@omdia.com