Is the South African film industry overly reliant on government subsidies and rebates?

In a recent Variety article titled "South African Industry Ponders Its Future as Challenges Mount: 'We're Not Cultivating a New Generation'," I posed a critical question to colleagues: Is the South African film industry overly reliant on government subsidies and rebates? To me, this question is crucial as South Africa navigates its economic challenges and tries to improve the sustainability of its film sector.

South Africa is back as the largest economy in Africa, courtesy of Nigeria’s ability to self-destruct on a nuclear scale—a story for another day. However, this is not saying much, as South Africa is plagued by monumental problems resulting from decades of economic underperformance. This extends to the film industry, where bloated budgets, high fees, and extremely poor commercial performance have become the norm. These issues mean that, at some stage, the government would have to slow down the flow of subsidies because they simply cannot afford it with many competing priorities like health, education, electricity, and housing. Yes, some can argue that the ANC has not covered itself in glory in the way they have managed the economy to date. However, the South African film industry has not contributed anywhere near enough in income to make it economically viable, able to stand on its own two feet or at least reduce its over-reliance on rebates.

The average budget for a South African film is typically around $420,000, supported by funding from the National Film and Video Foundation (NFVF), Local Film Commission’s and Department of Trade and Industry (DTI) incentives. However, most budgets I've personally encountered over the years range between $700,000 and $10 million—significantly higher than the reported average.

In 2023, the total gross for South African films was approximately $34.8 million, with an average income of around $246,781 per film release. This figure includes both high-grossing and lower-performing films, highlighting the unsustainable commercial model currently in place. 2024 doesn't seem to be faring any better so far, with the average income per film release around $208,000. These numbers reveal a significant gap between production costs and revenue generated, underscoring the industry's over-reliance on government support.

Therefore, to break even on a budget of $420,000, the film would need to make approximately $1,260,000 at the box office, considering additional marketing costs and the revenue split with theatres. Let’s use the pre-Covid era of 2019 as a benchmark when most observers thought the industry was in much better shape, the NFVF report in this year shows no local film at the South African Box office generated $1m. The only film that came close was "The Kandasamys: The Wedding" with its earnings of R18.9 million (approximately ￡945,000). The total revenue from local South African films in 2019 was just R60.4 million ($4.23 million USD), however, the average budget for domestic films was R11.3 million ($791,000 USD), providing valuable insights into the state of the South African film industry in 2019, highlighting both the challenges faced by local productions and their contributions to the overall box office revenue.

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Moving forward, the film industry needs to focus on:

1.????? Developing more commercially viable projects targeting South Africans and the global black audience and not film Festivals.

2.????? Improving skills and investment in marketing and distribution strategies.

3.????? Investing in skills development to reduce production costs.

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While government subsidies have nurtured the South African film industry, over-reliance on this support is unsustainable. The industry must urgently explore alternative funding models, reduce budgets, and improve commercial performance to decrease dependence on government aid. This shift is crucial for the long-term viability and increased economic contribution of the South African film industry as it balances artistic vision with commercial viability.

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Sources:

Box Office Mojo

NFVF Reports

National Empowerment Fund

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