Moses Silinda
19 October 2007
opinion
Johannesburg — THE film industry in SA is growing rapidly. An industry that in 1995 generated 4000 jobs now employs about 20000 workers and has been recognised as key to achieving the country's Accelerated and Shared Growth Initiative for SA objectives through the creation of jobs and foreign investment. The total value of the domestic entertainment industry is estimated to be about R12bn; R2,2bn of that is generated by the film industry and is set to double over the next few years. The Industrial Development Corporation's (IDC's) vision is to create a sustainable film industry, in which skills have been transferred and "homegrown" films are made and watched by many South Africans. To date, the IDC has funded more than 30 films, with an investment of more than R500m in the past six years, creating more than 5000 jobs, significant exposure to a global market, black economic empowerment, small and medium-sized enterprises and skills development. We are now seeing a number of interesting trends that will continue to drive the growth and development of the local film industry.
The first and most well-recognised trend is that of international investment through the local production of films such as Blood Diamond and 1000 BC, which has resulted in direct investment of billions of rand in the South African economy. SA's low production costs give it a competitive advantage internationally -- Cape Town is still 20% cheaper than Australia and 30%-40% cheaper than the European Union or the US. The multiplier effect of this investment for the South African economy is significant. It creates jobs and facilitates skills development by enabling local industry participants to work with experienced foreign partners (directors, photographers and writers). It also helps develop local small businesses, when small production companies are hired to work alongside the international film crews.
Most filmmakers see funding as the biggest stumbling block to making films in SA. Leading TV-producing nations (such as France, the UK and Australia) have an average state funding ratio of 19%.
SA's state funding ratio through recent investment via the National Film and Video Foundation has increased to 2,6% -- still a long way off international benchmarks.
One of the most promising developments in the sector is the growing demand for South African homegrown films such as Yesterday, Tsotsi and Leon Schuster's films. However, funding is often dependent on having an international distribution channel, better to guarantee a return on capital. This acts as a constraint on the filmmakers' ability to produce local films. One way of addressing the issue is to grow local distribution channels and develop audiences in SA -- ensuring financial viability for the industry.
The IDC has worked in collaboration with institutions such as the National Film and Video Foundation and the trade and industry department, as well as media companies such as Ster-Kinekor, to find a way to bring film content to the masses, particularly in SA's townships. The recent opening of Ster-Kinekor in Maponya shopping mall in Soweto is a good example of expanding distribution networks, which now reach about 5-million Sowetans.
Another trend, which has vast access implications, is the move to new technologies and alternative digital distribution platforms for content, including mobile technology, internet growth, improved broadband technology, digital broadcasting and digital cinema. As an example, film distributors have historically needed to print copies of each film for use in every outlet, which at about R20000-R30000 a copy is expensive. The move to digital means that just one copy can be used for numerous outlets at a much reduced cost, making expansion of the distribution network much easier.
The fact remains that there is still a significant shortage of funding in this sector, with no major financiers in SA except for the IDC. The IDC's mandate is uniquely developmental, focusing on small and medium-size budgets (R2m-R50m), where we can make an impact. So far, it has been worthwhile, both from a developmental and investment returns perspective. But there is still a perception of the industry as a risky one to invest in. The way to mitigate this is to take a medium- to long-term view, as we do, and spread investment across a broad portfolio of projects. Funding should be based upon a comprehensive business plan, and the principle of never being the sole investor (we contribute up to a maximum of 49%).
Initiatives are beginning to be put in place to help address the industry's funding and skills issues. The trade and industry department's modification of its 2004 rebate scheme to cater for low-budget films will make a significant difference to the financing of local films. Training is also being provided by organisations such as the National Film and Video Foundation to ensure that SA develops the skills necessary to make this a sustainable industry.
There is a strong future for the film industry in SA. Realising this potential depends on cultivating local skills and starting to commit more seriously to funding.
Silinda is head of media and motion pictures at the IDC.
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