Hollywood missing out on $10 billion by undervaluing Black projects

22 March 2021 Consulting.us 4 min. read
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Hollywood could unlock $10 billion in annual revenue (a 7% increase) if it addresses racial inequities in the US film and TV industry, according to a report from strategy firm McKinsey & Company.

McKinsey’s research found that fewer Black-led projects get made, and when they do, they are generally underfunded and undervalued despite offering higher relative returns than other properties (approximately 10% higher ROI).

McKinsey’s $10 billion estimate is based revenue gains from closing the current representation deficit in Black off-screen talent, achieving production and marketing budget parity, and providing equal international distribution to Black-led properties.

On-screen, representation for Black actors isn’t as dire as one might casually assume. Black leads were slightly underrepresented in films between 2015 and 2019, at 11% versus the 13.4% Black proportion of the US population. Black actors accounted for 14% of supporting roles in films, achieving near spot-on representation.

Hollywood missing out on $10 billion by undervaluing Black projects

In 2019, Black leads accounted for 14.1% of cable TV shows, 11.6% in broadcast TV roles, and 4.7% of streaming lead roles, according to the McKinsey report. Netflix, however, commissioned its own independent report after McKinsey concluded its research, and that report highlighted the platform’s high on-screen representation relative to other streaming companies. Black talent was overrepresented in lead and co-lead roles, at 15.2%, in Netflix productions made between 2018 and 2019.

Hollywood’s more pressing issue lies in Black underrepresentation in off-screen talent. Black professionals accounted for only 6% of directors, 6% of producers, and 4% of writers in US films between 2015 and 2019.

Professionals in the movie and TV industry told McKinsey that Black talent tends to be shut out of projects unless senior team members are Black. The data found that films with a Black producer or director are much more likely to have a Black writer, and if a film’s producer is Black, it’s much more likely to have a Black director.

Hollywood missing out on $10 billion by undervaluing Black projects

Black professionals (and Hispanic professionals, for that matter) are also very underrepresented in executive decision-making roles – such as department heads or top management roles at studios. Ninety-two percent of film executives are white and 87% of TV executives are white, compared to their 60% share of the US population.

The McKinsey report found that Black on- and off-screen talent is often pigeonholed to race-specific (Lincoln, Selma) or race-related material (Barbershop 3). Race-agnostic films receive three times the average production budget of race-related films.

Black off-screen talent also faces hurdles in race-agnostic films. When films of any kind have two or more Black professionals in off-screen roles, they receive significantly lower funding (40% less) than other films. The average production budget for films with a Black lead or co-lead, meanwhile, is a quarter less than budgets for films with no Black leads.

Hollywood missing out on $10 billion by undervaluing Black projects

Bringing greater equity to Hollywood is no small task, according to McKinsey’s report. But the consulting firm thinks creating an independent, third-party organization to drive change would help.

“Such an arm’s-length group would need vocal backers and strong partnerships with film and TV leaders to boost its reach and influence across the industry. A well-funded, third-party organization of this nature could strengthen individual efforts by developing and scaling best practices, collecting and disseminating intersectional data, and reporting on progress across the industry,” the report noted.

The organization would help shepherd efforts to ensure diverse representation – especially in off-screen talent and executives, drive initiatives to increase transparency and accountability, and encourage financial support for a wide range of Black stories.