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Hollywood may be missing out on billions in potential revenue by failing to tackle its deep-rooted racial inequities, a new McKinsey & Company analysis says.
If the $148 billion television and film industry addressed racial-equity barriers with respect to financing, content development, marketing and distribution, it could unleash upward of $10 billion in additional annual revenue, according to the firm’s new report on Black representation in TV and film. That would translate to a roughly 7% increase.
“By stifling Black talent throughout the film and TV industry ecosystem — and at every step of the content-development process — Hollywood is leaving at least $10 billion in revenue on the table each year,” the report’s authors wrote. “Achieving racial equity will make the film and TV sector more just and more profitable.”
McKinsey arrived at its estimates “based on closing the representation deficit for Black off-screen talent, achieving production and marketing budget parity, and giving Black-led properties equal international distribution,” the report said. The baseline figure was based on 2019 industry revenues that totaled $148 billion.
The report, while acknowledging that the industry had made some headway in recent years with on-screen representation and diversity-and-inclusion efforts, also sounded a familiar alarm about Black representation and the limited scope of opportunity afforded to up-and-coming Black talent.
For example, though Black people make up about 13.4% of the country’s population, they played 11% of leading roles in movies released between 2015 and 2019, and 14% of supporting cast members. Black actors “are often funneled to race-related projects, which typically receive lower investment in both production and promotion,” the report added.
Black Americans were far more underrepresented off-screen, making up just 6% of film directors and producers and 4% of writers.
“ Black talent is often left out of projects unless a higher-level production professional is Black. ”
McKinsey found “mixed progress” on the television front, with Black actors making up 11.6% of leads on broadcast shows, 14% of leads on cable shows, and under 5% of streaming show leads in 2019. Just 5% of all showrunners are Black.
“Fewer Black-led stories get told, and when they are, these projects have been consistently underfunded and undervalued, despite often earning higher relative returns than other properties,” the report said. “Just as the racial wealth gap is constraining the U.S. economy, the film and TV industry will continue to leave money on the table if it fails to advance racial equity.”
Despite their relatively low numbers, Black creators, producers and directors wind up “primarily responsible” for providing other off-screen Black talent with opportunities, the report found. Black talent is often left out of projects unless a higher-level production professional is Black.
And as with other industries, white executives dominate top decision-making roles in entertainment, making up 92% of C-suite executives in film and 87% of those in TV.
White, upper-class social networks
A mix of financial constraints; industry reliance on largely white, upper-class extended networks for circulating job opportunities; and industry gatekeepers’ racial bias keeps Black talent from breaking into Hollywood, the report found.
For example, low or nonexistent pay for entry-level positions — what’s regarded as “a privileged apprenticeship,” as one white executive put it — keeps many Black Americans out of the industry, McKinsey said, pointing to the well-documented racial wealth gap. Black actors also get fewer lead-role opportunities early on in their careers, and the gaps between jobs can prevent them from earning steady income that lets them remain in the industry, the report said.
McKinsey drew from existing research reports on film and television, industry data, and anonymous interviews with Black and non-Black industry professionals about their lived experiences. The BlackLight Collective, a group of Black industry leaders, also provided input.
To close the gaps identified, the report said, industry leaders should set diverse-representation targets (McKinsey suggested matching the population’s 13.4% share of Black Americans and 40% share of nonwhite people) and expand recruiting; track racial-equity goals and be transparent about progress; and dedicate up-front funding to boost diversity in personnel and content.
They should also think of creating an independent advocacy group to further racial-equity goals, the report suggested, rather than burdening Black industry professionals with reforming the entire system themselves.
The Academy of Motion Picture Arts and Sciences and the Television Academy did not immediately return MarketWatch requests for comment.
The analysis came weeks after the release of a Netflix NFLX, +3.67% -commissioned report led by Stacy Smith, the founder and director of the University of Southern California’s Annenberg Inclusion Initiative, on inclusion in the streaming giant’s original U.S. scripted films and series from 2018 to 2019.
That report found that Netflix had made progress with respect to inclusion of women, Black talent and women of color, but had work to do in its inclusion of LGBTQ people, people with disabilities and certain racial and ethnic groups including Latino Americans.
In a blog post about the study’s results, Netflix co-CEO Ted Sarandos announced the so-called Netflix Fund for Creative Equity, a $100 million investment over five years in external groups that help people from underrepresented communities succeed in TV and film, “as well as bespoke Netflix programs that will help us to identify, train and provide job placement for up-and-coming talent globally.”
“Doing better means establishing even more opportunities for people from underrepresented communities to have their voices heard, and purposefully closing capacity and skill gaps with training programs where they are needed,” Sarandos said.
