Picture: 123RF/ANGELA WAYE
Picture: 123RF/ANGELA WAYE

It’s been another sunny SA Christmas, with more fun-for-the-whole-family cinema releases for the holidays that do insanely well at the box office. In the US, holiday releases play out in the same, spend-crazy way. It’s a formula. It works. Like Black Friday and, well, Christmas. Everywhere.

For feature films, release dates are vital: if a filmmaker is lucky enough for their production flighted in theatres at a premium juncture of the year, such as the holidays, it should do well. Your film should “gross”.

It’s interesting that’s the word used to describe box office takings, gross; interesting because it is what it says. It includes what’s paid to the theatres, a not insubstantial part of ticket sales. What’s “net” goes to the filmmaker, usually after a whole lot else is paid away to enablers, as well as to production funders. Usually not a lot is left, especially not to self-fund the next venture.

The SA film industry is mature. It’s more than frenetic foot traffic past a box office and into a cinema for a feature. It includes made-for-television films, short films, documentaries, episodic and reality television, and game shows. It also supports local and extensive foreign commercial shoots. Until recently, the SABC was the single biggest buyer of local content in the country. It’s now MultiChoice.

The Republic has moved on; become sophisticated (the fourth industrial revolution, I guess). Content is distributed intelligently through media that is generally accessible, even to the marginalised South African with a simple mobile device. Then there are the big international platforms such as Netflix. Even Robert Marawa has his own YouTube Channel. It’s not just Ster Kinekor theatres and Bakgat any more.

The SA film industry suffers many of the limitations that start-up entrepreneurs do, its maturity notwithstanding. It is grossly underfunded, and pretty much as Eric Miyeni unfortunately alluded, recently, “crawling with grant-dependent film producers”.

Emerging producers depend heavily on grant funding because there’s virtually nothing else. Equity providers for all sorts of productions are, more than usual, medical specialists or dentists or loan sharks

There’s a structural reason for this: unlike with Lego or tequila, film production companies have no idea what demand for their product is likely to be. To some degree, they try to sell this uncertainty on to distributors, who take a gambled view on what audiences want.

It doesn’t always work, even in established markets — the recent Cats experience for example and every Terminator movie after T2. In many cases, distributors (the world over) even demand creative input to the point that the end product nowhere near resembles what was initially envisaged — all in the belief that so adapted it will better sell.

The basic underlying problem local films face cannot be solved by a parallel cinematic universe of theatres with content for “the majority of South Africans”; Hlaudi Motsoeneng tried that with radio and it undid the SABC. As with SA venture capital companies that are rare and often struggle to grasp the nuances of start-ups, there aren’t sophisticated funders who understand film. It’s a supply-side issue — precisely the business of production (that Miyeni thinks is irrelevant).

Emerging producers depend heavily on grant funding because there’s virtually nothing else. Equity providers for all sorts of productions are, more than usual, medical specialists or dentists or loan sharks. It’s fascinating how often small businesses, such as automotive body shops, would rather help out with funding the principal photography of a TV series than place cash on deposit for the same two months and earn next to nothing. RMB plays a little in film debt, but not really in emerging productions.

There are no non-governmental institutional funds that focus on film, which is absurd because almost all production in the industry is insured through completion guarantees and all-risk insurance underwritten by major houses such as Hollard, Lombard and Santam.

From a risk perspective, production is well-dimensioned and robust, and should be better supported. Cover provided by insurance companies is not in isolation of distribution arrangements being in place. A company will not provide gap-funding for a production without both insurance and distribution for the end product. The demand-side of this economic equation is a checked box. Some distributors even pre-pay for intellectual property with no product at all, just belief in the production house.

It’s production challenges, specifically financing, that have left the industry to fend for itself. And it’s not at the government’s door — grant money from state channels is principally what’s keeping SA film afloat. It needs more elaborate, private-sector funding interest. Risk-adjusted returns from the industry are commensurate, and materially less of a lottery than start-ups. But venture capital funds exist in SA, though not for film. It makes no sense.

• Cader is an investment banker, formerly at Deutsche Bank, and management consultant at Stern Stewart. He runs a film financing company called Lwembu Quixotix.