Harry Potter and the death of an industry

The wizard has cast a spell on British film. But he vanishes soon

To audiences, Harry Potter films are rip-roaring fantasy adventures that come along every one or two years. Kids and adults alike are always keen to climb aboard the Hogwarts express. Even critics are generally fairly well-disposed to the films, which combine cracking storylines, highly inventive special effects and vivid character performances.

To the British film industry, Harry Potter movies have a rather more serious meaning. The franchise may be in the hands of a US studio (Warner Bros) but its transformative effect on the British film landscape can't be underestimated. Predictably the latest film has gone to the top of the box-office charts. Since the first Harry Potter adventure (The Philosopher's Stone) started shooting at Leavesden Studios almost exactly 10 years ago, the fast-growing boy in the specs has provided British actors, technicians, visual effects houses, publicists and exhibitors with a veritable and long-lasting bonanza.

The statistics are startling. The most recent Harry Potter (The Half-Blood Prince) grossed more than $900m at the international box-office in 2009. Its predecessors posted similar numbers. The first six films are calculated to have grossed more than $5.4bn in international box-office – and these are all movies made in Watford.

Some analysts are infuriated at the habit of claiming films like Harry Potter, Inception and The Dark Knight as British when the company that makes them (and that reaps most of the dividends) is based in Burbank, California. However, many of the key creative forces behind these films have been British, and they have all generated huge amounts of inward investment in the UK.

Thanks to Harry Potter, Britain has two bona-fide new international movie stars (in Daniel Radcliffe and Emma Watson). Radcliffe is a big enough name to headline a new non-Potter film like the forthcoming Woman in Black. Watson is a paparazzi favourite who told Vogue magazine recently that she was almost "sick" with nerves when she had a money conversation with her father and realised her own slice of the Hogwarts pie could be £20m.

British effects houses have, likewise, reaped dividends from the screen versions of JK Rowling's novels. Soho-based Double Negative, which provides visual effects for the films, has prospered. It is behind such scenes as Voldemort's Death-Eater attack on the Millennium Bridge which featured in The Half-Blood Prince.

"The Harry Potter franchise and Warner Brothers' support has been one of the cornerstones for building the UK VFX [visual effects] industry," says Double Negative managing director Alex Hope. "Over the ten years that British companies have been working on the franchise, the UK has been transformed into a world leader in the VFX field."

Rivals like Cinesite and Framestore have even developed new digital tools especially for Potter.

Having Harry Potter as an ongoing series in the back yard has helped the British to develop their film-making infrastructure.

The upside for tourism has also been evident from the outset. There are now special Harry Potter tours to allow foreign visitors to follow in the boy-wizard's footsteps. The films have often foregrounded British landmarks, such as St Paul's Cathedral and Alnwick Castle. Potter has also been credited with boosting attendance at private schools (although one guesses that, in the current economic climate, it will take more than Hogwarts magic to keep up the numbers there.)

"Harry Potter has had a phenomenal effect on the British film industry," says Adrian Wootton, chief executive of Film London: "There was the volume of people they employed for a decade or more. Harry Potter provided an anchor for Warner Bros to bring other production to the UK, and also acted as a beacon for promoting the UK film industry to other studios."

Most good things – including movie franchises – come to an end sooner or later. The Brits have always known that the Harry Potter cycle was finite. Unlike the James Bond series, which seems capable of constant reinvention regardless of how many Bond books Ian Fleming actually wrote, the tales from Hogwarts won't keep being told on screen indefinitely. The child stars Daniel Radcliffe and Emma Watson are now young adults. They can't stay in Neverland for ever. When Harry Potter and the Deathly Hallows: Part 2 comes out in the summer, it will mark the end of the series.

For several years now, British film-industry observers have been asking anxiously what will happen when the Harry Potter series finishes. In the film world, success can be forgotten very quickly. Peter Jackson may be ramping up to make The Hobbit in New Zealand but New Line Cinema, the outfit behind Lord of the Rings, has long since lost its independence. Distributors and audiences don't care where films are made. At the American Film Market in Santa Monica this week, Harry Potter already seemed like something in the past. Despite the huge posters for the new Harry Potter movie that can be seen dotted all over town, the focus now has shifted. The next big thing is predicted to be The Hunger Games, a new franchise being adapted by Lionsgate from the kids' sci-fi novels by Suzanne Collins. Gary Ross (of Seabiscuit fame) is in the frame to direct at least the first of what will be a trilogy – and almost certainly won't shoot in the UK.

Memories in Britain of The Golden Compass are still very raw. Chris Weitz's Philip Pullman adaptation was released with plenty of fanfare in 2007. The film, shot in Shepperton and largely post-produced in Soho, had been hailed as the perfect platform for showing off British film-making expertise. The hopes were that Pullman's Dark Materials novels would build into a new franchise to rival Harry Potter. In the event, the sequel was never commissioned. The 2006 Stormbreaker film marked another failed attempt at building a new brand in the Potter mould.

Thanks to the upheavals at MGM, the next James Bond movie is still some way in the future. No Bond, no Harry Potter – this was the apocalyptic prospect that faced the UK industry only recently. A downturn in investment appeared inevitable. There was the frightening prospect of all those British grandes dames and formidable character actors being out of work.

However, there are hints that it might not be so difficult for the British industry to adjust to the post-Harry Potter world after all. Just last week, in what was a major boost for British film after the upheavals of the summer, Warner Bros announced it was going to set up its own permanent production base at Leavesden and will be investing millions in improving the studios there. The fears that Warner would decamp from Britain once it had finished with Hogwarts seem to have been misplaced. Why would Warner Bros invest so heavily unless they planned to bring more movies to Britain?

British studios are currently crammed. We have had Martin Scorsese in the UK for months, filming his 3D kids' yarn Hugo Cabret. Various other big Hollywood movies from the next Pirates of the Caribbean to Captain America: The First Avenger have also been shooting at British studios.

Even when the films stop, Harry Potter won't be forgotten. A new Potter theme park, The Wizarding World of Harry Potter, has opened in Florida. There are hopes for a similar venture in Britain, perhaps at Leavesden itself. A persuasive argument can even be made that the boy from Hogwarts has done as much for the overall health of British film industry as all those huffing and puffing (and very well paid) executives who have been running the UK Film Council since 2000.

Eyebrows were raised this summer when it emerged that, thanks to Hogwarts-like Hollywood accounting practices, Harry Potter and the Order of the Phoenix wasn't yet in profit in spite of making close to $1bn at the box-office. This didn't mean it was a failure, but was more to do with Hollywood studios' habit of loading all sorts of costs on to a production so there are no net profits. Everyone knows that this has been one of the most successful franchises in Hollywood history. The more successful it has become over the years, the better it has been as a showcase for the British film industry.

The question now is whether that industry can continue to prosper without Potter as its crutch.