Alma Economics was commissioned by Pact, the trade body for UK independent film, to analyse the extent to which market failures affecting UK independent films are larger than those affecting other UK-based screen activity. The analysis focused on market failures that fall under the category of positive externalities. Also known as positive spillover effects, these occur when an activity produces benefits for economic agents not directly involved. They can lead to underinvestment as benefits accrue to those who do not pay for them.

One important such spillover effect takes the form of talent incubation: low-budget films have historically been known as a catalyst for launching emerging on- and off-screen filmmaking talent. Our research supports this assertion, indicating that low-budget films are substantially more effective at launching emerging artists than large-budget films. We also found considerable evidence that film can generate wellbeing effects beyond direct entertainment value, for example, in the form of capturing lived experiences of people in the UK.

To illustrate the identified impacts, we developed several case studies of specific films and filmmakers, such as The Imitation Game (2014) and Bend It Like Beckham (2002).

Read the full report here.