$10 billion – That’s how much Hollywood loses annually because of racial biases

Hollywood is one of the biggest entertainment industries in the world. Over the years, multiple research has examined the lack of diversity in the sector and attempt to outline how it is hurting revenue in the industry.

In perhaps what can be described as the most comprehensive report on how the lack of diversity in Hollywood costs the industry, management consulting firm McKinsey & Company has given an estimate of the financial cost and solutions to overcome the challenge.

The report, which was recently released, examined how inequality shapes the industry and how much it ultimately costs. The authors of the report said the $148 billion film and TV loses $10 billion, or 7%, every year by ignoring systemic racial inequalities.

“Fewer Black-led stories get told, and when they are, these projects have been consistently underfunded and undervalued, despite often earning higher relative returns than other properties,” wrote the study’s authors: Jonathan Dunn, Sheldon Lyn, Nony Onyeador, and Ammanuel Zegeye.

The study also noted that 92% of film executives are white and 87% are in television. What is more, it said agents and executives at the top three talent agencies are approximately 90% white — and a striking 97% among partners.

The report also found that a black lead or co-lead receives a production budget of less than 24 percent less than a movie with a white lead. An anonymous black creative executive told the authors that when executives “are looking for Black content, they’re looking for Wakanda or poverty, with no in between.” Another anonymous Black actor said, “I have to take stereotypical works because that’s what’s out there, but then when I take those roles, they say that’s all I am capable of.”

The McKinsey report, which was conducted between 2004 to 2019, also examined research report by the “Hollywood Diversity Report” conducted annually by the University of California, Los Angeles, Nielsen’s 2020 “Being Seen on Screen: Diverse Representation and Inclusion on TV,” and other reports on thousands of film and TV shows.

The authors of the report also collaborated with BlackLight Collective, a group with more than 90 Blacks leaders who work in the film and television industry, according to the New York Times. They also conducted anonymous interviews with more than 50 Black and non-Black industry participants including studio executives, producers, writers, directors, and agents

The report announced measures to address racial inequalities in Hollywood, including the creation of a well-funded, third-party organization for a more comprehensive approach to racial equality.

“It would seem unreasonable to expect on- and off- screen Black talent to continue spending countless hours trying to reform this vast, complex industry on their own, time they could otherwise be spending creating the next hit series or blockbuster movie franchise,” the authors wrote.