How policy can boost screen production

The creative economy occupies an important position in our economic and social lives. In 2022 the cultural sector contributed US$3 trillion to global gross domestic product (GDP), as well as providing 6.2% of all employment. In leading markets, the sector is expected to grow by up to 4% per year by 2030. With no signs of slowing down, the audiovisual sector is one of the pillars of the Cultural and Creative Economy.

Policy makers intervene in content production markets not only to achieve cultural objectives but also because the sector holds significant economic importance. The sector provides high-value employment opportunities and generates valuable export earnings. While governments have access to a wide range of policy instruments to influence content production, there is limited empirical analysis to assess their effectiveness.

Frontier Economics has undertaken new econometric analysis of how different policies can stimulate investment in content production. There is significant variation in how policy is applied across different countries and over time. Our analysis considered how this variation explained differences in the levels of investment in content by broadcasters, after accounting for all other factors that influence investment.  

We found that:

     More restrictive policies in the sector will reduce broadcasters’ investments. Restrictive policies will impose costs and reduce the willingness to invest in content. The analysis found that restrictions equivalent to implementation of local content quotas would, all else equal, reduce investment in local content by 8.2%.

     Production incentive programmes lead to higher levels of investment by broadcasters in the local screen sector. Implementing a “low” production investment programme (where “low” is defined as incentives that relate to less than 20% of allowable costs), would increase the level of investment in local content by 6.5%. Increasing the generosity of the programme will further increase the level of investment.

These findings have important implications for policy frameworks that apply to the creative economy. Policies such as quotas, obligations, or restrictions, that increase the costs and risks to providers of audiovisual services, will, all else equal, lower the likelihood that new production investments will be green-lighted. They could mean that some inward investment is redirected to countries with more favourable investment environments. Whereas policies that reduce costs and risks will support investment in locally produced content and attract inward investment. While this econometric analysis focused on investments by broadcasters the results are very likely to have relevance for the wider sector.

Read Frontier’s report on stimulating screen production investment here and the associated technical annex here.

For more information please contact media@frontier-economics.com, or call +44 (0)20 7031 7000.