Lack Of Diversity Costs Hollywood $10B Annually, Report Finds

HOLLYWOOD, CA — A lack of racial diversity and inclusion in Hollywood means the television and movie industry may be leaving as much as $10 billion a year on the table, according to a report released Thursday by the consulting group McKinsey & Co.

McKinsey researchers analyzed multiple existing reports from the last five years about diversity and inequity within film and television and worked with the BlackLight Collective, a group of Black artists and executives in the industry.

The report concluded that the film and TV industry loses out by undervaluing Black-told stories and placing barriers to Black representation in front of and behind the camera. Addressing the existing barriers in the industry could "unlock more than $10 billion in annual revenues," the report said.

The $10 billion represents potential revenue derived from global box office sales as well as subscriptions to streaming and cable services within the United States.

"If anything, executives should aspire for even higher upside, including from diversity across all underrepresented groups, as audiences become more diverse and the growth in demand for diverse content far outstrips supply growth," the report said.

The complex structure of the film and television industry makes it hard for diversity and inclusion to prosper, the report found. Entry-level work offers low or no pay, and the tightknit industry skews overwhelmingly white and upper class. Industry gatekeepers tend to hire people from backgrounds similar to their own.

Even after Black professionals break into the industry, they get fewer chances to excel in film and television compared with their white counterparts, McKinsey researchers found.

“Even for those who do get a real chance in the industry, Black professionals have much less room for failure than their white counterparts do,” according to the report.

There's also a higher chance that Black talent will find themselves creatively "pigeonholed and funneled to race-related content, which often plays into stereotypes," the report said.

Researchers found that films with two or more Black professionals working behind the scenes are twice as likely as other films to deal specifically with race or race-adjacent subjects, with “Selma” and “Barbershop: The Next Cut” as examples.

Despite the barriers that exist, researchers offered a series of steps the industry can take to increase diversity and inclusion in film and television.

Studios and networks should set specific hiring goals for Black and nonwhite representation at all levels of employment and make those goals public as a way to be held accountable, the report said.

Studios should also financially commit a portion of their annual budgets to Black-led projects, the report added.

“To advance racial equity — and to tap this significant financial opportunity — industry leaders should strongly consider dedicating up-front funding to increasing diverse content and talent,” the researchers said.

For its part, the Academy of Motion Picture Arts and Sciences announced in 2020 a new series of representation and inclusion standards for the Oscars that are "designed to encourage equitable representation on and off screen in order to better reflect the diversity of the movie-going audience." The standards won’t take full effect until 2024.

The Academy previously received criticism in 2015 during the #OscarsSoWhite social media campaign when all 20 actors nominated in the lead and supporting categories were white. In response to that campaign the Academy announced changes to its membership that would double the number of women and people of color in the organization by 2020, according to NPR.