by Bobby Amm. “Industry sustainability” has become the buzz word in the commercial service sector in Cape Town over the last few months, as the industry grapples with several challenges which now pose a threat to its 25-year success story.
Concerned members of the Commercial Producers Association (CPA) in August 2018 met with all sectors of the industry to discuss and workshop ways in which to revive the industry, which has become one of the Western Cape’s biggest employers and put Cape Town on the map as arguably the world’s favorite film-production center. Even the City of Cape Town offered its support and played an instrumental role in bringing all the players together to chart the way forward.
Collection of factors
So, what happened to create the situation that Cape Town currently finds itself in? The answer isn’t a simple one but rather a collection of factors — some of which the industry has control over and others which are simply a sign of the times in an unpredictable world.
1. Production costs have escalated and are now too high
Because the commercial services sector in Cape Town is very seasonal and the demand is high in the summer months, costs are invariably driven up. The effects may not be evident over a short period but, over a 10- or 15-year span, it’s become all too clear that industry-related inflation is simply too high. Cape Town has become too expensive for international clients.
2. Our currency is volatile
Added to this, the cost of international production in South Africa is closely tied into the trials and tribulations of the rand. The industry benefits from a weak rand but, when the currency strengthens, it’s challenging to get suppliers to understand that prices need to come down in response. What’s very clear is that it’s unsustainable to base the success of an industry on an unpredictable currency.
3. There are a whole lot of new and hungry competitors
Where Cape Town was one of the original production locations when it opened its doors to foreigners in the early 1990s, there are now dozens of countries which’ve set themselves up as able competitors. Many of the first wave of challengers, such as Argentina, grew very quickly and soon priced themselves out of the market. Now we have countries such as Portugal, Thailand, Croatia and even Spain competing successfully against SA for business.
4. Long-time clients have “destination fatigue”
Many international clients have been producing their commercials in SA over many years and are very familiar with Cape Town and its various locations. As destination fatigue sets in, clients are now more inclined to try out many of the new countries they may not have previously visited or worked in.
5. Global uncertainty is a big issue
International clients are more reluctant to travel due to growing global uncertainty and the increased risk in terrorism. Some clients prefer to remain closer to home, which is why Spain has recently seen a resurgence in its popularity and Portugal is on the rise.
6. Red tape and the lack of government incentives remains off-putting to clients
The SA government and its provincial authorities offer no real production incentives to international clients shooting commercials, unlike many other destinations, including Mauritius. This is off-putting to many clients which are used to taking advantage of savings offered by way of incentive packages.
Although the visa and location situation has improved in recent years, red tape remains a deterrent to international clients which value a film-friendly environment.
7. Cape Town’s drought (and the PR put out about it) wasn’t at all helpful
The perception that “Day Zero” was imminent and that mayhem was sure to follow (as reported by many international publications) proved to be a deterrent to international clients in the last season. Although production companies pulled out all the stops to keep things moving, some clients perceive the risks as being too great and were also concerned about their personal comfort while working in SA.
~•~•~
The purpose of the CPA’s engagement with the industry’s supplier base was to bring these important issues to their attention and to show the impact that these seven factors have been currently having on our service industry. While there’s not a lot the industry can do about some of these issues, it’s been proposed that everyone involved cooperate to make SA more competitive and attractive to international clients.
Industry response
This means we need a greater understanding of the key challenges and an increased openness to being more flexible and negotiable in order to win work. The response of the industry will determine if we can turn the situation around or if the service industry is on borrowed time.
Bobby Amm is chief executive of the Commercial Producers Association of South Africa (CPA), the trade association of production companies that produce television, cinema and internet commercials for the local and international market. After a brief stint in journalism, she began her career in the industry at the Consultative Committee for the Entertainment Industry in the early 1990s. She first joined the CPA in 1997 but left three years later to join a production company. After finding that she missed the big-picture perspective of the CPA and the interesting issues which continuously perplex the production industry, Bobby returned to the CPA in 2003. She contributes “The Martini Shot” column monthly, covering developments, trends and insights into the commercial production and film services industries in South Africa, to MarkLives.
— One subscription form, three newsletters: sign up now for the MarkLives newsletter, including Ramify headlines; The Interlocker, our new monthly comms-focused mailer; and Brands & Branding, launching soon!