CPA survey results deconstructed

Reflections on the local commercial production industry

By Bobby Amm, Executive Officer, the Commercial Producers Association 

With South Africa’s unstable commercial production industry, and our currently strained economy, the topic of sustainability has been receiving a lot more attention. This has come sharply into focus via the CPA’s annual survey, which has revealed some noteworthy results this year.

The annual CPA survey

The CPA runs a survey every year to better understand the magnitude of the industry and to detect prospects, challenges and local trends. The findings are assembled into two groups of results:

The whole group: 40 – 50 contributors per year

The control group: 30 South African production companies that participate in the survey every year

Even though the number of participants isn’t high relative to the greater industry, most of the heavyweight companies are included, so the results are an adequate reflection of the general industry, we believe. For instance, the control group on its own, turned over R1,25 billion this last year.

The results from 2017

• Commercials produced: In total, 703 commercials were produced by the survey participants for a little more than R1,6 billion.
• Number of filming days: These ads were shot over 1 680 days, with an average daily budget of over R900,000.
• Variety of commercials: More local ads were produced (368) than service ads (305), and South African directors made 30 ads for overseas clients.
• Filming landscape: In total, 58% of the ads were shot in the Western Cape, 39% were shot in Gauteng, and only 3% were shot in other regions.
• Biggest customers: After South Africa, Germany was our biggest client, with 74 ads made. Next was the United Kingdom with 72, the United States with 51, France with 40, and Scandinavia with 26.
• Expense analysis: Almost 50% of production costs go to remunerating the crew and hiring equipment. The other big costs take up: 13% for art and set construction, 5% for location fees, 9% for talent, and 6% for post-production.
• Rising location costs: Production is still relatively affordable in Joburg, but the increasing costs in Cape Town are making it hard to shoot commercials there. With accessibility to the area limited to those with deep pockets, the city and its surrounds are quickly becoming service-only regions.

How this affects you

From these results, it looks like the industry is dipping, mainly thanks to rising production costs and an insignificant change to turnover. This trend is more gradual in the control group, but it persists – suggesting that production budgets aren’t growing in line with expenses.

As this gap gets wider, so does the danger to the production industry. It’s one we should take note of too, as other countries have taken years to recover after experiencing similar trends.

Impact on global projects

Something else we’ve seen is that many CPA members are getting less work from overseas. We think this could be because of variables like:

• Universal unease: Trump, Brexit, human trafficking, terrorism… the world is a scary and uncertain place these days, so clients are less likely to travel.
• Rate of exchange: The UK is no longer our biggest client, mainly because of Brexit and the weakening Pound. The Rand is also getting stronger against the US Dollar and the Euro, which has the potential to make South African production less affordable this season.
• Location fatigue: Clients are on the lookout for novel, exciting locations. South Africa appears to have priced itself out of the market, to a point, so other players like Portugal, Thailand, and a few South American regions are preferred.
• Politics & economy: SA isn’t currently stable, both politically and economically, so clients (particularly newer ones) are choosing ‘safer’ countries to film in. Plus, with our local recession, prices are up too.
• Greedy South African: Some overseas clients believe that SA’s succumbed to the greed factor. Production departments are growing and our talent want to earn more for working in remote areas. With less inflation in their home countries than we’re familiar here, these clients may struggle to understand our increasing costs.
• Bureaucracy: While it may be a lot easier to get a visa and process other admin needed for overseas clients to come to SA, it still isn’t ideal; this deters clients from coming to SA. In fact, many jobs are lost annually because an overseas director can’t apply for a visa in person.

The future of our industry

The views on the upcoming season are varied, with notable concern coming from experts who market to overseas clients. But it isn’t all bad. For instance, South Africa has strengths that many other countries don’t, like:

1. A solid reputation in the production world
2. Hard working crews and quick-thinking solutions
3. Great South African hospitality

Some of the issues affecting our industry are beyond our control. Of the ones we can affect, however, many can be undertaken with some imaginative flexibility and a specific focus on keeping costs down. By working together, we may be able to secure these jobs and turn this downward trend around – for everyone’s sake.