Warner’s UK Studios Report Record Revenue

Warner Bros. has revealed that revenue at its Leavesden Studios complex in the UK rose by 81.2% in 2021 to hit an all-time high of $125.3 million (£101.1 million) fueled by surging demand for streaming content.

Located 20 miles outside London, Leavesden was originally an aircraft factory where planes were built during World War II. It was first used as a studio to shoot the James Bond movie Goldeneye in 1995 and it has been home to some of the most famous franchises in film since then.

All eight of the Harry Potter movies were filmed there along with more recent hits including Spider-Man: Far From Home and last year’s Batman reboot. Warner bought the studio in 2010 and it has been filing annual financial statements ever since.

The pandemic proved to be a dream ticket for the studio as consumers craved new content during lockdown and became hooked on streaming services.

According to the British Film Institute, in 2021 combined expenditure on film and high-end television production in the UK hit $6.9 billion (£5.6 billion), the highest total ever recorded and $1.6 billion (£1.3 billion) more than was spent in 2019. The growth has been driven by streaming as spending on high-end television production represented a massive 72% of the total.

That trend seems set to continue as the popularity of video on demand is still growing despite the cost of living crisis. Earlier this month the Digital Entertainment and Retail Association announced that revenue from streaming subscriptions in the UK rose by 17.6% last year to $4.7 billion (£3.8 billion), almost double the entire amount made from the sale of music.

Echoing this, last week NetflixNFLX
revealed that it had smashed its own estimates by adding 7.7 million net new subscribers in the fourth quarter of 2022 giving it a total of 230.8 million worldwide. Its fortunes were boosted by the launch of a new cheaper, ad-supported subscription plan and the launch of Tim Burton’s new drama ‘Wednesday’, which regularly topped the weekly Top 10 rankings.

Leavesden was home to several of last year’s other top performers including HBO’s Game of Thrones prequel, House of The Dragon, and Batman spin-off series Pennyworth, starring Jack Bannon in the title role as the caped crusader’s butler.

Heavy hitters like this contributed to the rise in Leavesden’s studio revenue but they weren’t the only driving force. The pandemic brought the curtain down on production between March and June 2020 so the following year benefited from the relaxation of restrictions.

UK productions were kickstarted with a $620 million (£500 million) government-backed insurance scheme which helped to mitigate the risk of filming during the pandemic. It has reportedly been the catalyst for more than 1,000 productions with budgets worth a total of $3.2 billion (£2.6 billion). Leavesden made the most of it.

During 2021 three new sound stages were brought into use bringing the total to 19. Leavesden isn’t stopping there. Earlier this month it got the go-ahead from the local government to build 11 new sound stages, three workshops and four new office buildings. It isn’t just expanding to capitalize on the booming streaming market but also to stay ahead of the game.

In June Shepperton Studios, which is also located on the outskirts of London, will open a 1.2 million square feet expansion making it the world’s second-biggest studio. Likewise, nearby Pinewood plans to spend $1.6 billion (£1.3 billion) on new facilities including a studio tour which will put it in even more direct competition with Leavesden.

Despite being a powerhouse, the studio only represents 57% of Leavesden’s revenue with the remainder coming from a tour behind the scenes of the Harry Potter movies. Known as the Warner Bros. Studio Tour London – The Making of Harry Potter, the sprawling attraction is set inside two hangar-like soundstages filled with props and sets from the movies.

Guests get to step inside the actual Great Hall set that was used in the movies and peer inside Harry’s dormitory in Hogwarts Castle. There’s even a full-size recreation of the spooky Diagon Alley with models of towering colorful characters embedded in the wonky buildings. Just like on an actual movie set, instructions are scrawled on the reverse of the façades showing how they fit together.

There are no rides but some of the exhibits are interactive. One allows a computer generated character to be controlled by guests moving their hands and arms whilst another digitally inserts them onto the back of a broomstick.

The original movie props are within touching distance including costumes, wigs and, of course, wands. Rows and rows of them. Every item is meticulously tagged with details of the film it was used in, the character it was used by and even the fictional materials it is meant to be made of.

The latest addition came in summer last year when the tour opened a life-size greenhouse where visitors can uproot an angry green shrub, known as a Mandrake, as Harry and his chums did in Harry Potter and the Chamber of Secrets.

The greenhouse appears to be rusted and in the grip of a giant vine which covers the walls inside. Its tendrils spread into flower boxes in the middle where plants seem to sprout from them. Thanks to some technical wizardry, a squirming and squealing sprite is revealed when the shrubs are pulled up.

The spellbinding attention to detail isn’t an unnecessary frill. The tour is Leavesden’s public face so if it cut any corners it could reflect badly on the studios and put off potential clients. To prevent this from happening the tour leaves no stone unturned and this approach has cast a powerful spell on Leavesden’s fortunes.

Since the doors to the tour swung open in 2012 it has generated a staggering $975.3 million (£786.8 million) of revenue – 71% more than the studio has made. As shown by the graph below, in 2021 the tour’s revenue rose 58.9% to $93.5 million (£75.4 million) as it emerged from lockdown along with a chain of Harry Potter themed retail stores which it runs. The tour also launched a Harry Potter photo exhibition in London which had a magic touch on its finances in 2021. It isn’t stopping there.

Warner isn’t following in Disney’s footsteps with a mass-market approach to themed entertainment. Instead of rolling out resorts, shops and theme parks all over the world, it is polishing its properties in select markets before expanding them when they are sparkling.

London’s Park Row restaurant, themed to Warner’s DC Comics super hero characters, has become the leader in its field since its doors swung open in summer 2021. Likewise, Warner has won a slew of awards for its indoor theme park in Abu Dhabi which opened in 2018. It sets the scene for further theme parks and restaurants giving Warner tremendous growth potential.

This model has a proven track record in retail as Warner pioneered its Harry Potter stores in the UK before expanding them internationally in 2021 with the opening of a boutique in New York’s Flatiron District. Like all good Hollywood stories, the tour will also have a sequel and in summer this year its first international outpost will open.

Called the Warner Bros. Studio Tour Tokyo – The Making of Harry Potter, it is being built on a 30,000 square meter site formerly occupied by the Toshimaen theme park. Leavesden’s financial statements show that $48.7 million (£39.3 million) alone has been spent on the construction of the new tour so it seems that no expense is being spared.

This increased investment partly led to the combined costs of Leavesden’s studio and tour increasing 30.4% to $166.6 million (£134.4 million) in 2021 though this was more than outpaced by the growth in overall revenue. That rose 70.9% to $218.8 million (£176.5 million) giving the company a net profit which increased more than three-fold to $41.2 million (£33.2 million).

Leavesden didn’t pay this out as a dividend to its parent Warner Bros. DiscoveryWBD
and instead banked the profit leading to its cash rising 160% to $52 million (£42 million). Nevertheless, Warner has not been left wanting. The financial statements reveal that it has received a total of $290 million (£234 million) in dividends from Leavesden over the past decade so it really does seem to have found a magic formula.