In Brief
- The film industry in the United Kingdom suffered a serious set back during the COVID-19 pandemic, one that it has struggled to recover from.
- Businesses across the sector are facing the effects of a combination of rising costs and declining cinema audiences, with many now facing the prospect of insolvency proceedings. The interconnected nature of the industry means that one business's failure can easily have knock-on effects for others as well.
- Some have been able to make use of the UK's "rescue" focused insolvency processes, such as Creditors Voluntary Arrangements and Restructuring Plans to put themselves on a surer footing.
- However, even these more collaborative processes can give rise to disputes and legal challenges.
- Participants in the industry will need to be alive to both the risks and the potential solutions available to them as they navigate this perilous period.
Introduction
The film landscape has transformed drastically since the COVID-19 pandemic – attention spans seem to have reduced, going to the cinema just isn't as affordable as it used to be, and many prefer to stream the newest releases from the comfort of their own homes. So, what does this mean for the UK film industry? We explore the challenges currently being faced by production companies and picture houses, and consider whether we are heading towards a future of no lights, no camera and no action.
Streaming v cinema
The British Film Institute (BFI) annual report on the UK box office for the first half (H1) of 2025 revealed a mixed picture.
Promisingly, cinema admissions were 12% higher than in H1 2024, and box office revenue was 18% higher. On the surface, this suggest that cinema is resurgent. However, despite these improvements, cinema admissions were 27% lower, and box office takings down 17%, than the pre-pandemic figures in H1 2019.
The persistent gap between current and pre-pandemic performance goes some way to explaining why so many cinema operators have entered insolvency proceedings despite recent year-on-year improvements: whilst it is in a period of recovery, the industry does not appear to be returning to sustainability.
In contrast, streaming services are thriving. In 2024, Netflix became the most-subscribed service, with nearly three-fifths (58%) of UK households paying for a subscription. It also exceeded $41 billion in revenue in 2025, growing 11% year-over-year due to international subscriber gains. This extraordinary growth reflects the increasing appeal of streaming services to consumers, and the challenges facing cinema operators in particular. However, it has consequences for the industry as a whole.
Cinema
Based on a BFI audience study, it seems that audiences do still value the cinema experience. However, they are increasingly less likely to pay for cinema tickets at their current price points.
The strongest drivers of cinema engagement are experience-based – audiences are attending the cinema as a "special treat", or to experience seeing a film on the big screen. Cultural movements have hugely also influenced cinema attendance. For example, 2023's "Barbenheimer" helped the UK box office surpass £1 billion for the first time since the pandemic. Meanwhile, following its TikTok craze, 2025's highest-grossing film in the UK, Minecraft: The Movie, had designated screenings where audiences could "whoop, yelp and clap". These movements have particularly highlighted how internet culture and social media trends can shape the way films are marketed, to help capitalise on its cultural discourse, and subsequently, to drive more audiences to the cinema. Similarly, limited "singalong" screenings have become popular cinema attractions for highly anticipated musicals or films with a cult following. These types of screenings can help to sustain or enhance a film's cultural momentum and generate additional revenue through alternative screening formats.
Nevertheless, the costs cinema attendance has been identified as a barrier to recovering audiences. Both ticket prices and ancillary retail offerings, such as food and beverages, are seen as increasingly unaffordable. A vicious cycle has subsequently developed whereby high ticket and concession prices are needed to compensate for declining audience numbers, but are in turn deterring attendances further. This reduces revenue further, making the cost structure even more unsustainable.
Cinema chains in the UK have faced a range of challenges due to these changes in the film industry, resulting in a wave of high-profile insolvencies and restructurings:
- Cineworld suffered severe financial losses following the COVID-19 pandemic and filed for bankruptcy in the US in 2022, subsequently entering administration in the UK in 2024.
- Empire Cinemas appointed liquidators in 2023, blaming a downturn in business as a result of the COVID-19 pandemic and competition from streaming services.
- Odeon Cinemas Group was recently advised on a £400m loan facility agreement to refinance its existing debts as well as provide more working capital to the cinema chain. This was due to the company's financial struggles resulting from a depletion in cinema audiences during the pandemic.
Streaming
The shift from cinema to streaming also has direct implications for businesses across the film production sector.
When audiences overwhelmingly choose to streaming over theatrical viewing, cinema operators lose revenue whilst still facing fixed (or growing) costs for property, staff, and equipment. Further, theatrical releases, and especially blockbusters, no longer guarantee profitability. This unpredictability in box office success has made it increasingly difficult for production companies to secure financing for new projects. To help minimise financial risk, film companies are turning to exclusive agreements with streaming platforms. Under such agreements, films are distributed only via a particular streaming platform, or with significantly shortened theatrical runs. For example, in 2022, Glass Onion: A Knives Out Mystery had only a limited one-week theatrical release in the US and internationally before premiering on Netflix. The reduced focus on driving audiences to cinemas also reflects the current wider economics of filmmaking: there is now a growing motivation to distribute new releases directly, or as soon as possible, onto streaming platforms, where profits are more likely to be earned and calculated through higher viewing numbers and more subscription fees from its member base.
However, whilst the rise of streaming services is counterbalancing the decline of the cinema to some extent, at the same time production costs have also continued to rise. This, combined with the decline in revenues from theatrical releases, has created an unsustainable squeeze on businesses in the industry which has driven numerous companies into insolvency:
- Technicolor UK, a visual effects (VFX) group which had worked on films ranging from Disney's original Pinocchio to recent remakes of The Lion King and Jungle Book, appointed administrators in February 2025. The company had been struggling with cash flow difficulties exacerbated by delayed payments from production companies themselves facing financial pressures.
- Axis Studios, Scotland's leading animation and VFX studio, entered administration in July 2024. This followed a decline in projects and persistently high labour costs, which led to the redundancy of 162 of its 166 employees.
- Winnersh Film Studios, and its parent company Stage Fifty, entered administration in April 2024 despite its studios serving as a popular location for Hollywood movies, including Ghostbusters: A Frozen Empire. The companies primarily attributed their financial difficulties to cash flow issues arising out of the 2023 writers' and actors' strikes in the US, among other factors.
- LipSync, a UK post-production house and film equity investor, entered into administration in May 2025.
Legal implications
The financial struggles endured by cinemas have found their way into the English courts. In 2024, Cineworld obtained approval from the High Court for a statutory restructuring scheme under Part 26A of the Companies Act 2006. Although these restructuring plans were objected to by the landlords, the High Court sanctioned the plans, in turn promoting the "rescue culture" for distressed business in financially challenging situations.
Likewise, thereThere was also litigation between London Trocadero and Picturehouse Cinemas. This concerned whether the landlord of the Trocadero Centre, who was obliged to insure the leased premises, was entitled to charge the full insurance "premium" to the tenant (Picturehouse Cinemas), including a commission paid to both the landlord's broker and the landlord itself. In the end, the High Court ruled London Trocadero to reimburse Picturehouse Cinemas approximately £700,000 in overpaid insurance rent. A case analysis of London Trocadero/Picturehouse Cinemas can be found on the Mishcon website here.
The age of AI
As production costs continue to rise and revenues remain uncertain, some companies are turning to AI as a potential solution. However,this is proving polarising. Some welcome it as a tool for improving film production – such as improving the authenticity of accents (2024's Oscar-winning The Brutalist) or creating visual images such as poster designs in 2024's Civil War. Others oppose its adoption entirely, fearing its impact on both the industry and the art itself.
In spite of this mixed reception, AI-first creative studios are beginning to emerge in the UK. Wonder, a London-based AI studio, raised £9 million in seed funding this year to assist in its aims of developing a new, AI driven, filmmaking model. Generative AI might be a source of disruption for the standard filmmaking business model. Equally, it may be that emerging AI-driven companies such as Wonder are able to significantly reduce the time and cost of production, potentially offering a lifeline for the financially struggling industry.
From an insolvency perspective, AI presents both risk and reward: whilst it may reduce production costs and improve financial viability for some companies, it could accelerate job losses and destabilise traditional business models, potentially triggering further restructurings across the sector. As we have seen above with Axis Studios, the increased use of AI for VFX work can undermine the services provided by VFX companies, increasing their financial concerns.
Conclusion
It is not all doom and gloom for the UK film industry, but there are significant concerns in sight. Cinemas do still serve an audience, but whether their offerings can adapt in the face of streaming platforms remains to be seen. Success in the film sector will likely depend on the ability to adapt business models, embrace new technologies carefully, and find sustainable ways to deliver the experiences audiences value. Companies which are able to navigate and tailor to the unpredictability of the industry may emerge stronger, whilst those that are not may face further financial struggles. However, insolvency procedures such as CVAs and Restructuring Plans may also provide a lifeline for businesses whilst they adapt to their new circumstances.
For insolvency practitioners, the film industry presents both challenges and opportunities. The sector's interconnected nature means that insolvencies often have domino effects, with the collapse of one company triggering financial distress amongst its customers and suppliers. On the other hand, this may incentivise companies to consider restructurings to help stabilise entire supply chains, especially to minimise the financial risk of any future events impacting a film's production.
Ultimately though, new trends and new waves of cinema – from silent films to talkies, from black and white to colour, and now from picture houses and physical media to digital streaming – are nothing new to the industry. Cinema will continue to adapt and find a sustainable form, and insolvency processes and restructurings will help it to do so. So, for now, there are lights and there are cameras, and there's plenty more action to come.
If you would like more information or support in managing insolvency-related issues, please get in touch with your usual Mishcon contact or with a member of the Insolvency team.