The latest series of the Devil’s Hour starring Peter Capaldi and Jessica Raine may be a supernatural thriller but it is being filmed in more prosaic surroundings: not far from the M25 in Surrey.
Shepperton studios, part of Pinewood Group, is now the second-largest film studio in the world after a new extension opened earlier this year.
Films and TV shows from Star Wars, Bridgerton and Indiana Jones to Barbie and Jurassic Park have been shot at least partly in the UK. The country’s film, television and photography sector brings in more than £17.4bn and employs more than 290,000 people, encouraged by generous tax breaks.
Warner Bros recently said Barbie, which was shot almost entirely in the UK at its Leavesden studios in Hertfordshire, contributed £80m to the UK economy and created 685 jobs.
Film studio space in the UK has doubled in the past three years from 297,000 sq metres (3.2m sq ft) in 2019 to 492,000 sq metres in 2022-23, according to UK government figures that suggest at the current rate of expansion Britain will be second only to Hollywood globally by the end of 2025. More new studio developments are planned.
However, the economic downturn, changing viewing habits and last year’s Hollywood writers’ and actors’ strikes, which hit productions, have prompted questions about whether all the proposed film studios will end up getting built, or be needed.
During the pandemic-induced “streaming wars” and the race to sign up new subscribers, services such as Netflix and Disney spent billions of dollars developing new content. Amazon paid a reported $1bn (£785m) on an adaptation of Lord of the Rings said to be the most expensive TV show ever, while Netflix is said to have paid $10m an episode for The Crown.
Growing demand meant that US media companies such as Netflix and Amazon MGM Studios took long leases at studios such as Pinewood Group, which owns both Pinewood and Shepperton and where James Bond films such as No Time to Die and Sam Mendes’ 1917 were filmed.
The block-booking of big studios by US giants during the expansion stoked demand for space from many smaller film-makers hunting for alternative venues, amid complaints that the UK could be running out of studio space.
“Capacity has been a huge issue the last few years,” said David Parfitt, an Oscar-winning British independent film producer and a former chair of Bafta. “In the past smaller film-makers could take advantage of gaps in the schedules of the big studios to shoot something for eight weeks. That largely stopped when companies block-booked the studios.”
As money poured in and demand for studio space boomed, the sector became increasingly attractive for private equity and institutional investors who were keen to finance new studio developments.
Planning consents for new film studios increased by 45% between 2018 and 2021, while applications were up 35%, according to a 2022 report by the property consultancy Knight Frank. Such developments included Eastbrook studios in London, with its 12 stages, backed by the California-based real estate investment company Hackman Capital Partners, which will come fully online in July 2024.
However, the downturn has left many questioning the logic of that vast expansion.
Disney, Warner Bros Discovery and Comcast have been slashing their content budgets because of heavy losses from their streaming services. In February 2023 Disney announced its intention to cut $3bn from content budgets.
Studios have also suffered amid a drop in advertising spending and a fall in commissions from domestic broadcasters. The British Film Institute reported that the combined UK film and high-end television production spend for 2023 reached £4.23bn, 32% down on 2022 because of the US writers’ and actors’ strikes.
“From a streaming perspective, it appears that numerous large, global services ordered and released too many shows and films as we exited the pandemic time-period,” said Marc DeBevoise, the chief executive of Brightcove, a video streaming and communications company.
Winnersh film studios in Berkshire, where Ghostbusters: Frozen Empire was partly filmed, went into administration in April and blamed “cashflow problems” linked to the 2023 strike.
Other studio developments have been paused. Sunset studios received planning permission in 2022 for Sunset Waltham Cross studios, a 21-stage facility planned for Broxbourne, Hertfordshire, in a venture between the private equity firm Blackstone and Hudson Pacific Properties, a real estate investment trust. It is an expansion of Sunset studios in Hollywood, where the films When Harry Met Sally and La La Land were filmed.
However, Hudson said that while site enabling work has been done, construction has not yet started and it has no estimate of a completion date.
Home of Production (HOP), a new studio development in Bedfordshire, has been given planning permission and was due to open in 2025, but there is no date now when work will commence.
Knight Frank said that of the 334,000 sq metres of planned stages across the UK’s top 11 developments, just three totalling79,000 sq metres were under construction as of September 2023.
Private equity and institutional investors are now far more cautious because of higher borrowing costs and inflation that has pushed up the cost building materials and wages.
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Freddie Owen, a partner in capital markets at Knight Frank, said: “There was significant interest from private equity looking to invest into the sector a couple of years ago but with the change in the economic environment coupled with the impact of the strikes, the market has definitely cooled.
“We don’t expect all the pipeline supply to be delivered.”
Owen Spencer, a senior solicitor at the law firm Forsters, said: “Developing a film studio is expensive. If you are asking for finance and have a 10-year pre-let deal with a US film company then that is attractive for a lender but there aren’t many of those. If a developer asks for financing for a development and doesn’t know who the tenants might be or there might only be independent film companies taking space several months at a time then that is less of an attractive investment.”
Andrew Reid, the chief content officer at Northern Ireland Screen, the screen agency for Northern Ireland, told Variety magazine this year: “If all the studio spaces planned come to fruition, then we will have too much. It is a delicate balance to ensure a steady stream of work without causing too much scarcity and having projects cannibalising each other.”
Some film studio projects have been stymied by local planning. Hertsmere borough council in March rejected plans for expansion by Sky Studios Elstree for its Elstree north site that would take its total number of sound stages to 22.
But despite the glut, many in the industry now believe there are grounds for optimism.
The film industry was given a boost in March’s budget when Jeremy Hunt announced he would give eligible film studios 40% relief on their gross business rates until 2034 – a tax break worth about £470m over the next 10 years.
The chancellor also granted more tax relief for visual effects in film and high-end TV and a new tax credit for UK independent films with a budget of less than £15m, something many believe will be a gamechanger.
Warner Bros is planning a 37,000 sq metre expansion at its studios in Leavesden, where it has filmed Wonka and Fantastic Beasts, with work due to start later this year.
Work started last December in Liverpool on a film studio on the site of the former Littlewoods pools business. John Moffat, the joint managing director at Capital & Centric, which is developing the project, said: “There’s certainly been demand challenges but they’ve been driven by external forces like the writers’ strike. The UK remains super competitive for the industry, with a strong tax regime and skills base.”
James Cameron, the Hollywood director of Titanic and Avatar, is supporting a new development, Marlow film studios, which will have 44,000 sq metres of new soundstages. The project is due to be considered by Buckinghamshire council in May.
A £450m planned Crown Works studios in Sunderland agreed in a devolution deal with the government and north-east will create 8,000 jobs and has received planning consent.
Samantha Perahia, the head of production UK for the British Film Commission, which is responsible for international film and television production in the UK, said demand was “ramping up”.
“The massive surge post Covid was never going to last,” she said. “A few years ago the UK was losing a lot of projects to locations like Hungary because we didn’t have capacity.
“Since then we have had the writers’ strike and are still facing the impact of that. Everyone seems to think we would go straight back to where we were after the strike ended but that’s not how the industry works. No one knows yet what the new normal is.”