The number of films being made in Britain has fallen to the lowest level since at least 2003, with those that are being being made on strikingly lower budgets.

The figures appear in the British Film Institute's yearbook, which in 200 pages of tables and trends tells a story that is best described as mixed.

On the consumer side, Britons watch more films across more platforms than ever before, with record receipts of £988m at the box office. But the production side is a grim picture. The number of films made was down from 87 in 2009 to 79 in 2010. Total films made in Britain, including Hollywood productions and co-productions, fell from 150 to 128 last year.

Similarly, overall production spend is down by 22% to £176m. In 2003, the median budget for a British film was £2.9m. That is down to £1.2m and appears to be falling further.

In the first half of 2011, the figures show a continued slump. There were 46 films with budgets of more than £500,000 in production: 20 domestic features, nine inward investment films, and 17 co-productions the lowest figure since the BFI began taking records in 2003.

Big studio-funded movies which began shooting in the first half of 2011 included The Dark Knight Rises, 47 Ronin, Gambit, and Tim Burton's next film Dark Shadows, starring Johnny Depp. Amanda Nevill, the BFI's chief executive, maintained there was still much to be cheerful about.

"We have an audience appetite for film that has rarely, if ever, been bettered." But there were challenges, she said. "It is essential that there is continued investment in innovation, skills and new talent to ensure Britain's position remains competitive."

The report shows an average Briton watched 81 films in 2010, whether at the cinema, on TV, DVD or video on demand. Box office receipts have never been higher at £988m, but the number of cinema tickets sold, 169m, was down on 2009 - the year of Avatar - by 2.4%. The UK is the third largest film market in the world, with a 7% share, after the US on 41% and Japan on 9%.

The highest grossing release of 2010 was Toy Story 3, earning £74m. That made it the second highest grossing film of all time at the UK box office, although if figures are adjusted for inflation it is fifth behind Avatar, Titanic, Harry Potter and the Philosopher's Stone, and the first Lord of the Rings film.

In terms of UK independents, Streetdance 3D was top, grossing £11.6m at the box office, followed by Kick-Ass, The Ghost, Made in Dagenham, and Four Lions. The foreign language table was topped by Bollywood's My Name is Khan, followed by The Girl with the Dragon Tattoo, The Girl Who Played with Fire, A Prophet, and the Italian film I Am Love.

The statistics also show top performing films with the greatest gender split. Sex and the City 2, released during the world cup, had a 73% female audience , while Green Zone had a 76% male audience.

The report's co-author Sean Perkins invoked the year 1946, when an astonishing 1.6bn cinema tickets were sold to a war-fatigued British public. That amounts to 36 visits a year, on average. No one expects a return to that golden age, but Perkins said: "It may be 65 years, but our appetite for film has not diminished - it has increased."

The difference is that we are watching many of our films on TV: eight out of 10 of all viewings, while cinema now accounts for a mere 4% of viewings.

There were 355 "non-mainstream" films released in 2010, making up 64% of the total number of theatrical releases. They grossed £66m but represented only 6.5% of total box office earnings.

The report also highlights trends, showing continuing fall in DVD rentals and the yet to really take off video on demand market.

The yearbook was previously paid for and published by the UK Film Council which was abolished last year. Its future is in some doubt because the BFI says it does not have the money to continue financing but Nevill said she was "very confident" that "new industry partnership models" would be found to produce it in the future.