By ignoring the systemic racial inequities that plague the film and television business, Hollywood is leaving $10 billion annually on the table. That is one of the main findings in a new report from the management consulting firm McKinsey & Company, which for the first time turned its attention to the lack of Black representation in Hollywood. And, unlike many other studies that do excellent jobs of pointing out problems without giving concrete solutions, this one includes a series of steps that could help change the makeup of the industry.

The consultants examined multiple existing research reports on thousands of film and TV shows including 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 annual work by the University of Southern California’s Annenberg Inclusion Initiative. The McKinsey researchers collaborated with the BlackLight Collective, a group of more than 90 Black leaders who work in film and television.

McKinsey conducted anonymous interviews with more than 50 Black and non-Black industry participants including studio executives, producers, writers, directors and agents. The goal was to both reflect their experiences and identify the “pain points” as they try to create content. Examples of such obstacles include Black talent being “forced to sell stories about personal trauma to get ideas optioned” and white executives’ stereotypical assumptions about target audiences being “valued more than lived experiences of creators.”

The study noted that Hollywood’s unique structure — involving unpaid or underpaid apprenticeships, tight-knit networks, small, informal and temporary work settings, often in far-flung locations — contributed somewhat to the ecosystem’s failings. But the report also recognized persistent trends that occur in large corporate settings: Black creatives are primarily responsible for providing opportunities for other Black offscreen talent; emerging Black actors receive fewer chances in their career and have a lower margin for error; and there is little minority representation among top management and executive boards. The film industry, the authors concluded, is a less diverse one than even typically homogeneous sectors like energy and finance.

“In the same way that collective action is needed to advance racial equity in corporate American, real and lasting change in film and TV will require concerted action and the joint commitment of stakeholders across the industry ecosystem,” said the study’s authors, Jonathan Dunn, Sheldon Lyn, Nony Onyeador and Ammanuel Zegeye.

According to the study, the average production budget for films with a Black lead or co-lead is a quarter less than the budget for films with no Black actors. One creative executive, who talked to the authors anonymously, said that when executives “are looking for Black content, they’re looking for Wakanda or poverty, with no in between.” Added one anonymous Black actor, “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.”

To solve these issues, McKinsey offered several concrete measures, including urging studios, networks, streaming services, agencies and production companies to commit publicly to a specific target for Black and nonwhite representation across all levels and roles that reflect the American population: 13.4 percent Black or a total of 40 percent for all people of color. And the report encouraged those companies to expand recruiting efforts beyond New York and Los Angeles into the South, where 60 percent of the Black American labor force is concentrated, and at historically Black colleges and universities.

The consultants also suggested increasing transparency and accountability with regular reporting on the racial, gender and ethnic makeup of their organizations. As reinforcement, the study said, executive bonuses should be tied to diversity targets so companies can “ensure that leaders are held to account for progress on racial equality.”

Another idea: financially support a range of Black stories by committing 13.4 percent of annual budgets to projects starring Black actors with Black producers, writers and directors behind the camera.

And lastly, the authors encouraged Hollywood to create an independent organization to promote diversity — an arms-length group with vocal backers and strong partnerships with film and TV leaders.

“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.