Making (and funding) movies in South Africa – a changing landscape

South Africa has long been a globally renowned resource for the international film industry. Now, with massive growth potential arising from its evolution and disruption by streaming survives, will private equity play a role in the future of financing local films? Graham Wood investigates.

Producing a film on South African soil is an incredibly complex affair. Funding it perhaps even more so. There’s a mind-boggling range of possibilities for how to finance a film project, taking in a plethora of potential sources ranging from distributors, broadcasters, studios and private individuals. Among the less popular ways of financing a film would be taking out a loan (risky!), and newer methods such as crowdfunding have been tried with success, especially with lower-budget films.

In South Africa, there are a range of national and provincial grants, incentives and rebates that play an absolutely central role in enabling the local industry to produce original content. Of course, they come with terms and conditions, such as quotas relating to employing local resources, from filming to postproduction (which is hardly a hardship given the quality of services and skills available). South Africa also has co-production treaties with several other countries, which are an additional channel for rebates. They include Australia, Canada, France, Germany, Italy, Ireland, the Netherlands, New Zealand, and the UK.

One element of the film financing picture that is more common overseas, but plays a relatively small role at the moment in SA, however, is private equity. Part of the reason for this is that locally made films tended not to have been hugely profitable in the past. The likes of Leon Schuster’s comedies stand out among the highest grossing local film productions, but there have historically been limited audiences for local movies, which has kept a lid on their profitability.

As a location and ‘service destination’, however, South Africa is renowned worldwide. Earlier this year, Tom Cruise famously spent two months in the Limpopo town of Hoedspruit filming sequences for Mission Impossible 8. There have, however, been many international films and television series and, of course, adverts shot in SA. From Mad Max and Tomb Raider to Mowgli: Legend of the Jungle, major Hollywood productions have filmed in SA. Other recent examples include HBO Max’s sci-fi series, Raised by Wolves, the sequel to Netflix’s The Kissing Booth and series such as the UK’s Dr Who.

Location-wise, 80% of the world’s locations are capable of being replicated, even within a few hours from Cape Town. South Africa’s long hours of daylight and dry winters in the interior (so fewer interruption due to rain) add to its appeal, providing reliable and favourable conditions for filming without interruptions.

80% of the world’s locations are capable of being replicated, even within a few hours from Cape Town.

Part of the attraction for major international and Hollywood film makers is that South Africa also comes with to world-class film infrastructure, including highly skilled and hard-working crews, studios on par with the world’s best, technology, hospitality and hugely favourable pricing, partly arising for the favourable exchange rate. The Department of Trade and Industry (DTI) says that it is “up to 40% cheaper to make film in the Western Cape then it is in the US or Europe, and 20% cheaper than Australia”.

In 2020, the DTI reported a 15% average annual growth in the local film industry since 2013, which might position the industry as a genuinely attractive and interesting alternative investment opportunity.

Recently, however, local producers have begun making films from scratch, or through international co-production arrangements, but with international stars and worldwide appeal and distribution plans rather than purely local consumption in mind. For example, 2020’s Rogue, an action thriller set in Africa starring Megan Fox, and Hallmark’s Love on Safari starring Lacey Chabert (who you'll recognise from Means Girls) are both official South African films made for international consumption. This approach represents a shift in the local film industry towards becoming an originator of film content rather than as merely a destination for international film production.

It is also worth noting that, along with this shift, other opportunities across the industry are also showing signs of growth potential, from animation, a small but growing segment, and from concept development to distribution, pre- and post-production, marketing, and even skills development and training.

Perhaps most significant, however, are the monumental disruptions brought about by the fourth industrial revolution, and, most of all, by the advent of streaming platforms such as Netflix, Amazon Prime, Disney Plus and a host of others.

The demand for content these platforms have created is one thing. The changes they have started ushering in in terms of how local film content is funded, commissioned and distributed is quite another. At the most immediate and fundamental level, streaming platforms have started to commission and buy local content such as films and series themselves.

But perhaps the greater long-term shift they represent lie in the possibilities they create for local content to be viewed at home and in the rest of the African continent, but also throughout the rest of the world.

It’s an exceptional example, but the way in which a South Korean production intended for local viewers such as Squid Games exploded and became a worldwide phenomenon demonstrates the potential for local productions to have global reach. In a less extreme sense, locally produced content can now, though the steaming platforms, which operate regionally, be distributed around the world that was inconceivable before.

Perhaps the deepest long-term potential for the local film industry is the untapped cultural wealth in South Africa and across the whole continent. There are local stories we haven’t even begun to tell, ways of telling them that are waiting to be forged and aesthetics that will be invented. Africa’s growth and modernisation is likely to set in motion a creative efflorescence that will find expression across all art forms, including film.

Of course, all these short- and long-term changes will also affect the ways in which local films are funded. Not least, is the likely advent of funds through which local investors will be able to invest in local productions with international reach. There is little doubt that, whatever the future hold, exciting times and significant changes lie ahead.

This article is part of a series by Altvest, exploring different alternative investment classes. Special thanks to Delon Bakker of Mannequin Pictures, Helen Kuun of Indigenous Film Distribution and Robbie Thorpe of Ochre Moving Pictures for their generosity with expertise and insight.