Netflix’s Shepperton Studios Deal Is Stretching the U.K.’s Production Limits

By Stewart Clarke

LOS ANGELES (Variety.com) – Netflix’s huge new hub at Shepperton Studios outside London is a further fillip for Britain’s booming production sector. Amid jitters over Brexit and its effects on the economy, the streaming giant’s commitment is a vote of confidence in the U.K. entertainment industry and a continuing source of local jobs.

But the decision by to set up shop in Shepperton will also have an unwanted ripple effect by putting major pressure on space and skills already in high demand, with the latest figures showing film and high-end TV spending topping $4 billion a year in Britain. The U.K. will need to move fast to remain an international sweet spot for U.S. studios to produce film and TV projects — and a place that nurtures the next generation coming through the independent sector.

“Location U.K. has a lot going for it,” says Daniel Battsek, head of Film4, which makes 12 to 15 movies a year. Britain’s facilities, talent and financial incentives form “a very heady mixture of things that studios and productions of all sizes are searching for,” he says. “But there are definite challenges that come with this massive amount of very well-resourced production.”

Battsek chairs Film London, which has backed the creation of a £100 million ($125 million) studio in Dagenham, East London. It’s one of numerous studio-construction projects in the works across the U.K. to meet the galloping demand for production space, including two separate complexes in Scotland, a studio in Yorkshire, another in Oxfordshire and a development underway in Liverpool.

Pinewood Group, which owns Shepperton, is also growing. It plans to create six new stages at its flagship Studios, four of which will open this year and two in 2020. At Shepperton, where films such as “Mamma Mia! Here We Go Again” and “Mary Poppins Returns” were recently shot, Netflix is taking over all 14 existing stages, but Pinewood hopes to add 16 more in 2021.

“Pinewood and Shepperton bring with them a huge amount of history,” says Pinewood Group chairman Paul Golding. “From Netflix’s perspective, as they talk to directors about making films for them, to the extent they can say, ‘You’ll be making the film at Shepperton,’ I think that’s hugely appealing.”

But from other producers’ perspectives, Netflix’s lock on Shepperton means that the U.K. has become even more booked up before new space can come online. (The streaming giant declined to comment for this story.) Even before taking up residence at Shepperton, Netflix employed more than 25,000 cast, crew and extras in the U.K. over the past year on almost 40 of its originals, including “Sex Education,” “Outlaw King” and its British jewel, “The Crown.”

“Studio space is at a premium, and market forces mean the highest bidder wins,” says Ampere Analysis research director Guy Bisson. “Whether that’s a plus or a minus depends on which side of the fence you sit, but certainly for smaller players, there’s a potential problem brewing in terms of access to the facilities they need.”

Warner Bros. has its own studios at Leavesden, near London, and Disney-Fox has a long-term deal to make movies at Pinewood. That leaves the likes of Amazon, Paramount, Sony and the bigger indie projects vying for available stages.

For independent movies and series, which often don’t require enormous stages and tend to shoot on location or in modified spaces, a scarcity of skilled below-the-line talent is a bigger issue. Production experts say specialist accountants and first ADs are among the roles now hardest to fill. The rise in the kind of high-end series Netflix specializes in has ratcheted up the pressure on availability, given the lengthy shoots and the frequent use of multiple directors and assistants.

“We need editors, accountants and grips and everything else as much as the studios do,” Battsek says. “We need to make sure that enough investment is going into training and regeneration of these skill sets, because they are going to be in demand for a considerable amount of time. It’s an area that needs more emphasis.”

Ben Roberts, the British Film Institute’s deputy chief executive, acknowledges the staffing headaches caused by the rapid expansion in production in the U.K. “We can’t say we haven’t seen some squeezes on the available crew,” he says. “But it’s a great opportunity to communicate more broadly that there are job opportunities in film and high-end TV. This notion of a freelance industry where you can’t guarantee a secure income is something we can take, with the studios building stages, and now say, ‘This is a career,’ to lots of people with transferable skills.”

Roberts says Netflix’s London outpost can be a boon to British independent producers, who can essentially serve as well-paid workers for hire while seperately pursuing indie projects that offer a better shot at retaining rights. (Netflix customarily retains all rights to a project.) Netflix seems “to be running quite a localized model, and I hope they really integrate themselves into the U.K. industry in a way they seem to be,” he says.

The expansion at Shepperton comes with a price tag of $621 million, and at Pinewood, of $248 million. The overall amount being sunk into studio construction across Britain is more than $1.05 billion. Finding space, not raising money, is the real problem, says consultant Nick Smith, a former Pinewood exec who has been involved with many of the large studio projects in the U.K.

Land in London and southeast England is notably hard to come by and expensive, which adds impetus to an industry push to make the business less London-centric, although investors are often warier of committing to locations outside the British capital. Belfast, in Northern Ireland, has “Game of Thrones” to its credit, and its Belfast Harbour Studios is home to Warner Horizon’s “Superman” prequel series, “Krypton.” Sources tell Variety that work is about to start there on a major 120,000-square-foot expansion with six new stages.

A site for a six-stage studio has been identified in Leeds, in Yorkshire, the city announced as the soon-to-be new home of British pubcaster Channel 4. “London is
really busy, and we need a better offering to producers outside of London,” says Screen Yorkshire CEO Sally Joynson. “The opening of the Leeds studio is part of that.”

Jane Tranter, formerly the L.A.-based production chief of the BBC’s commercial arm, has staked a claim in Wales, where Pinewood also has a base. She set up her production outfit, Bad Wolf (“His Dark Materials”), in Cardiff with the backing of the Welsh government. Bad Wolf has a lease on Wolf Studios, which boasts classrooms and offers training. “A good public-private partnership like the Welsh government and Bad Wolf’s ensures creative industries don’t just support productions coming in and out for a short period, but growth 52 weeks of the year,” she says. “Without that, we are a heartbeat away from someone coming to Wales and not being able to crew up.”

Even U.S. studio-sector players are looking to get in on the action in Blighty. Former Pinewood exec Smith is working with Atlanta’s Blackhall Studios, where films including “Venom” were shot, on expanding to the U.K. “Pinewood went to Atlanta, and they want to do it the other way,” Smith says. “They are looking to set up here in a significant way.”

Still, a major increase in British facilities is months or even years away, whereas the explosion in demand is happening now. “We don’t want a ‘Sold out’ sign going up on the U.K.’s studio space,” says one senior figure in the British industry. And given the global ambitions at Netflix, which now has production hubs in Madrid and London, the impact of the streaming behemoth rolling into town is likely coming to a country near you. “I’d expect local production hubs to increase in importance,” says Ampere’s Bisson, “particularly as they solve not just a need to output locally flavored content, but also help politically in terms of inward investment into a country, its talent and its local economy.”

While it might be easy to blame Netflix for hogging valuable space, Pinewood insists that the streamer’s move into Shepperton is fueling growth that will benefit everyone in the end. “Netflix’s decision to create this production hub gives us the confidence to expand as quickly as we are,” Pinewood’s Golding says. “The expansion is for all of our customers — not just Netflix — be they big or be they small.”