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A New Report Says Racial Inequity Is Costing the Entertainment Industry $10 Billion Annually

A new study says Hollywood’s diversity problem is costing it billions — literally. Conducted by consulting firm McKinsey and Company, “Black Representation In Film and TV: The Challenges and Impact of Increasing Diversity” reveals that by making the concerted effort to support Black professionals in the film and TV industry and portraying diversity in their projects, the industry could pull in an additional $10 billion in annual revenues.

In its entirety, the determination from the report was that while some gains have been made for Black representation, there are still severe deficits in hiring practices, pay equity, inclusion, and more.

SANTA MONICA, CA – FEBRUARY 25: The cast and creators of ‘Moonlight’ accept the Robert Altman Award onstage during the 2017 Film Independent Spirit Awards at the Santa Monica Pier on February 25, 2017 in Santa Monica, California. (Photo by Randall Michelson/Getty Images for Film Independent)

This is apparently to the film and TV industry’s financial detriment, as the report stated, “Barriers that undermine equity in content development, financing, marketing, and distribution come at a substantial cost to the film and TV industry. We estimate that the film and TV industry could unlock more than $10 billion in annual revenues simply by addressing these barriers, the equivalent of a 7 percent expansion in baseline industry revenues.”

The estimates were calculated by “closing the representation deficit for Black off-screen talent, achieving production and marketing budget parity, and giving Black-led properties equal international distribution.”

This demonstrated that the racial inequalities perpetuated by the industry are “unjustified” when looking at the potential gains from fixing those issues, according to the article.

The study called the results “unsurprising,” considering a recent report from Creative Artists Agency and Parrot Analytics that “found that the demand for shows where at least 40 percent of the cast is diverse (in line with the US Census estimate for the nonwhite population) has more than doubled in the last three years (more than 112 percent), outpacing the growth in the number of these shows that have made it to air (more than 42 percent).”

In order to create the study, the authors explained that they examined data and reviewed numerous research reports on thousands of films and TV shows.

“We also conducted anonymous interviews with dozens of film and TV professionals, writers, directors, producers, agents, actors, and executives, enabling them to speak openly about the system-level obstacles and routine indignities they encounter.”

They also partnered with the BlackLight Collective, a group of “Black leaders, artists, and executives” working in the film and TV industry, who assisted with the research.

Their overall findings encapsulated a Hollywood where there is very little diversity among the top management and boards, the few Black projects that get off the ground are constantly “underfunded and undervalued,” and Black professionals face an exclusionary, discriminatory workplace.

The data showed that while several entertainment companies are attempting to improve diversity and inclusion within their ranks, inequity is still a prevalent, deep-rooted problem in the industry.

The study went into greater detail about the particular challenges that Black talent must contend with, as well the proposed solutions the industry must take to eradicate its bias.

Black talent is largely “shut out” of significant roles unless a prominent member of production is Black, and actors receive considerably fewer opportunities to nab a critically lauded leading role, in comparison to white actors who are given more chances to fail before they succeed. Many of the parts available to Black actors are stereotypical or race-adjacent, which also serves to pigeonhole them.

It was also noted that Black professionals are expected to pay a sort of “Black tax” in the industry in which the onus is on the individual to pay out of pocket for lighting, hair, and makeup, unlike white talent, constantly explain racism to white colleagues, and continue to exhaustively advocate for their own racial equity.   

The study then identified four key steps that film and TV companies can adopt to develop an industry of racial equity. “Ensure diverse representation, especially among off-screen talent and executives, increase transparency and accountability, seek and financially support a wide range of Black stories, and create an independent organization to promote diversity.”

In order for plausible and persistent change to be possible, it will necessitate the collaborative effort and the mutual allegiance of stakeholders across the industry network, preferably guided by an independent, third-party organization created by the industry, according to the analysis.

In conclusion, the study said that “equally as critical” as producing an increase in profit, “improving racial equity should prove to be a boon for audiences. When the on-screen and off-screen representation of Black talent matches the share of Black Americans and when the industry succeeds in dismantling the ubiquitous workplace barriers preventing Black creators from telling a range of stories, viewers of all races will gain access to the many different products of Black creative expression.”

“Ultimately, the reshaping of the film and TV ecosystem will play a role in reshaping ideas on race—and the advancement of racial equity — in America and beyond.”

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