Hollywood misses out on $49.4 billion windfall by not boosting projects with Black Americans –

by Jeffrey McKinney

May 7, 2024

A new report suggests that Hollywood could benefit from reducing current disparities and thus grow economically.

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New analysis suggests Hollywood has sacrificed $49.4 billion for about a decade by not involving the black American community more in industrial projects.

According to a new report from Creative Investment Research, the math measures what Tinseltown is giving up by undervaluing projects aimed at diverse audiences. The findings also suggest that the film industry is losing $15.3 billion annually by not partnering more with Black filmmakers, studios and their audiences.

The findings come after consulting firm McKinsey & Co. recently reported that Hollywood is losing $30 billion a year by failing to align with Black, Latinx and Asian-American/Pacific Islander communities in various ways. He said $10 billion a year could be made by ending black inequality alone.

William Michael Cunningham, economist and owner of Creative Investment Research, said BLACK BUSINESS 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 secures a more sustainable and innovative future. »

Cunningham says 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 equity enhancement.

He proclaims that the greatest impact could come from mitigating risk through diversity. Cunningham pointed out that the industry could benefit substantially by avoiding box office failures through more consistent audience engagement with diverse content.

“A conservative estimate of a 10% reduction in failure losses would equate to $2 billion in cost savings per year, or $20 billion over a decade. »

Cunningham shared that more substantial social impact and brand value could be a game-changer. He predicted that increasing stock values, attracting top talent and striking more favorable deals could help increase the valuation of major studios by $6 billion. He says this is based on the current market capitalization of these studios, which is around $200 billion.

He is also optimistic about the prospects for global market penetration. Films with diverse casts and culturally resonant stories, like “Black Panther,” have shown the ability to significantly increase box office revenue.

Assuming various films capture an additional 2% of the global box office market, or about $42 billion in pre-pandemic years, that could mean an additional $840 million per year. With a sustained effort over 10 years, this could bring in around $8.4 billion.

Additionally, he claims that increased audience engagement and increased consumer spending on ancillary products across the U.S. merchandising and entertainment markets could generate $6 billion in revenue.

Another area Cunningham cites is the longevity and loyalty of diverse content. He projected that syndication, reruns and streaming rights can add significantly to a film's lifetime earnings.

If diverse content extends the average revenue-generating lifespan by just 20% and considering that the U.S. film and television industry's revenues from these sources are approximately $25 billion per year, this could generate an additional $5 billion over a decade.

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