The Martini Shot: The State of SA Commercial Production

 

By Bobby Amm. With the commercial production industry in flux, and the economy under strain, sustainability has become a hot topic. Nothing clarifies it like the annual survey of the Commercial Producers Association (CPA) of South Africa. This year, we’ve uncovered some striking results that put things into perspective.

More about the survey

Every year, the CPA runs a survey to determine the size and scope of the industry and to identify opportunities, challenges and trends. The results are collated into two sets of data:

  1. The total group: 40–50 survey participants in any given year
  2. The control group: 30 South African production houses that participate every year

Although the number of companies surveyed isn’t high, most large and medium players are involved, so we believe the results are good reflections of the industry. In fact, the control group alone accounted for R1.25bn in turnover in the last year.

2017’s survey results

  • Number of commercials: A total of 703 commercials were made at a cost of just over R1.6bn — a conservative evaluation considering that not all companies participated.
  • Shoot days: To make these commercials, 1 680 shoot days were needed and the average daily budget was just short of R1m.
  • Different commercials: Slightly more local commercials were made (368) than service commercials (305); local directors made 30 commercials for international agencies.
  • Production footprint: As much as 58% of the commercials was filmed in the Western Cape, while 39% was made in Gauteng and 3% in other provinces.
  • Largest client: Germany was SA’s largest client, with 74 commercials produced. The UK came in second with 72, followed by the US (51), France (40), and Scandinavia (26).
  • Production expenses: Crew remuneration is the biggest expense when making commercials, followed by equipment hire. These areas account for almost 50% of the total costs. Other significant expenses include: set construction and art (13%), location fees (5%), talent (9%), and post-production (6%).
  • Location expenses: While production remains affordable in Johannesburg, escalating costs are making it difficult to produce commercials in Cape Town. With its relative inaccessibility, the region is consequently becoming a service-only destination.

What this means for us

After a surge in 2014, the industry appears to be dipping, mainly due to a rise in production costs and no notable change in turnover. In the control group, the cost increase is more gradual but the trend persists — indicating that budgets aren’t increasing in line with costs.

As the gap between cost and turnover widens, so, too, does the risk to the industry. This is a red flag for us: other countries, after similar phenomena, have taken years to recover.

Losing overseas clients

Another trend we’re seeing is that CPA members are missing out on international work. We believe the reasons for this could include a combination of the following variables:

  • Global uncertainty: Brexit, Trump, North Korea, terrorism… the world is an unstable place at the moment, making clients less inclined to travel.
  • Exchange rate: The UK has lost its place as our biggest client base, mainly due to Brexit and the weaker pound. The rand had also been gaining strength against the dollar and euro, which could make shooting in South Africa more expensive this season.
  • Destination fatigue: Many clients are looking for new, fresh locations. To an extent, SA has priced itself out of the market, so countries such as Portugal, Thailand, and some South American countries are emerging as the new players.
  • Political & economic instability: SA isn’t as politically stable as it used to be. This sways clients (particularly newer ones) into choosing other countries. We’ve also been in the grips of a local recession, which causes prices to rise, too.
  • The greed factor: Some international clients believe South Africans have become greedy. Departments are larger than they were a year ago and talent want to be paid handsomely for working remotely. With little inflation at home, overseas clients may find it difficult to understand the SA tendency to increase costs.
  • Red tape: Although there’s been a substantial improvement in the admin surrounding locations and visas, it still deters clients from using SA. Jobs are lost every year because a director is not available in person to apply for a visa.

Our industry’s future

On the one hand, views on the coming season are mixed, with a lot of concern from those who market to clients abroad. On the other hand, we have reason to be optimistic as we have a solid reputation in the production world for hard-working crews and quick-thinking solutions — not to mention our great SA hospitality. We need to concentrate on keeping costs to a minimum and reigniting our brand internationally.

While some of these concerns are rooted in elements beyond our reach, there are many issues that can be addressed with some creative flexibility. If we work together to secure these jobs, we may be able to turn it around — for all of our sake.