May 7, 2024
Fresh report suggests that Hollywood could benefit by addressing current disparities and grow economically by doing so.
A new analysis suggests that Hollywood sacrificed $49.4 billion over roughly a decade by not engaging the Black American community more on industry projects.
According to a fresh report by Creative Investment Research, the calculation measures what Tinseltown gives up by undervaluing projects geared toward diverse audiences. The finding also surmises the film industry loses $15.3 billion annually by not partnering more with Black filmmakers, studios, and their audiences.
The discoveries come after consulting firm McKinsey & Co. recently indicated Hollywood foregoes $30 billion annually by not banding with Black, Latinx, and Asian-American/Pacific Islander communities through assorted ways. It reported that $10 billion a year could be gained by ending the Black inequity gap alone.
William Michael Cunningham, an economist and owner of Creative Investment Research, told BLACK ENTERPRISE his firm’s report suggests that Hollywood’s economic performance is intrinsically linked to its ability to diversify and include more representative content and creators.
“By addressing current disparities, the industry not only stands to gain economically but also to secure a more sustainable and innovative future.”
Cunningham declares that his firm’s analysis broke down several identified areas to quantify the revenue impact of increased diversity in Hollywood. They include audience expansion, global market reach, ancillary products, risk mitigation, longevity and loyalty, and brand value enhancement.
He proclaims that the largest impact could come from risk mitigation through diversity. Cunningham stressed that the industry could benefit substantially by avoiding box office flops through more consistent audience engagement with diverse content.
“A conservative estimate of a 10% reduction in losses from flops would equate to $2 billion in saved costs annually, contributing $20 billion over a decade.”
Cunningham shared that more substantial social impact and brand value could be game-changing. He projected that enhanced stock value, attracting better talent, and securing more favorable deals could help boost the valuation of major studios by $6 billion. He says that’s based on those studios’ current market cap of around $200 billion.
He is also upbeat about the prospect of global market reach. Films with diverse casts and culturally resonant stories, like “Black Panther,” have shown the ability to significantly increase box office receipts.
“Assuming diverse films capture an additional 2% of the global box office market, approximately $42 billion in pre-pandemic years, this could mean an extra $840 million annually. Given a sustained effort over 10 years, this could contribute about $8.4 billion.”
Further, he claims expanded audience engagement and increased consumer spending on ancillary products in the overall U.S. merchandising and entertainment markets might add $6 billion in revenue.
Another area Cunningham cites is the longevity and loyalty of diverse content. He projected syndication, reruns, and streaming rights can add significantly to a film’s lifetime revenue.
“If diverse content extends the average revenue-generating lifespan by even 20% and considering the U.S. film and TV industry’s revenue from these sources is about $25 billion annually, this could generate an additional $5 billion over a decade.”
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