Film producers need to moan less about how bad the state of the industry is and start thinking more about how they can structure thier films as viable business propositions of interest to investors and VC's. The fact is, most independent feature films do not make money, and this will only change if producers take a new approach.

The money is out there to make movies, the interest is out there to make movies, in fact who doesn't want to make movies? It's a dream for many people, both within and outside the film industry, but to secure private equity funding the venture must be profitable.

Investors these days are more risk averse than ever, and any potential investment needs to be as secure as possible. If you as a producer do not believe 110% in the viability and profit potential of your film, then you can't expect anyone else to. It's not just about believing this, a film needs to be approached as a business and therefore it must be structured and designed with one goal in mind... to make a reasonable return for all involved, and it must perform.

Every element involved must work towards this goal and any liabilities must be minimized. The story must fall into a genre that has a proven track record of turning profit and filling cinema seats, the script cannot just be a good script, it must be a killer script! There must be real bankable talent attached, the budget must be realistic and there must be distributor interest. If such a package is structured to take advantage of co-production treaties, tax incentives and government rebates, it is possible for the risk to investors to be near zero. Who won't want to invest in a near zero risk venture?

Lets start getting smart, thinking outside of the box, thinking of audiences outside of South Africa (more on that later) and making movies that satisfy the art and the pocket.

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Re-read Richard's excellent post and the challenge to think outside the box. It's the only way to go, but in doing so, i would like to go back to the "Box" - the television that is - and more particularly, the community broadcasters. A tie up with them, I think, could solve some of the hardest problems for low budget but great productions, funding and distribution.

Here are the numbers (and apologies to Richard for not considering foreign audiences yet - more on that later):

- Total spend on filmed entertainment by South African's in 2009: roughly R1 billion, of which a portion goes to the studios and a small fraction of that goes to SA produced/made productions - not encouraging at all;

- Total Adspend in South Africa: roughly R36,2bn according to AC Nielsen (but probably closer to R24 billion new money in once self-promotion/trade swaps etc are deducted - but it is increasing;

- Using the higher R36,2bn figure, the breakdown works like this: TV R21,2bn; Print R9,4bn; Radio R3,6bn; Outdoor R1bn; The Internet R468m; Cinema R304m; and the rest in the miscellaneous catch all category. PwC's Media Outlook Report pegs broadcast TV advertising at R7,5bn expanding at a 9.6% compound annual rate
during to 2014 to R11,9 bn. Whatever the position, good-old TV takes a high proportion of adspend in SA and this is set to continue to grow, new media notwithstanding - it is radio, outdoor and print that is set to get squeezed.

For licensed broadcast and especially free-to-air TV broadcasters, this is great. In SA, there are only 5 channels that get almost all this adspend, SABC 1,2,3; etv and the M-Net/Supersport combination - competition is not exactly fierce and they don't have to contest the predations of new media, cellphone ads and the rest. But here's the thing: up to 80% of the adspend directed towards the (mostly) free-to-air broadcasters is spent nighly between 18:00 and 22:00; maybe 4-5 hours of every day. Find a rate card for any one of them, they spike at primetime. Thnings may open up with digital migration but no-one should hold their breath - we can't even agree on what the digital terrestrial technology platform should be.

Now here is a chicken and egg conundrum: All SA's top TV shows (i.e. Generations, 7de Laan, Muvhango, Rhythm City, Carte Blanche WWF Wrestling etc and the international TV release movies) measured by the official AMPS survey are in primetime. The highest regular AR's (leaving out top sports events) measured by AMPS are between 4-25 with 1 AR point representing about 150 000 unique viewers throughout the show. There are efforts (if that is what they can be called) to get local film-makers showcased like on the Mzanzi channel or on etv but being showcased does not equal making money. Either the channel used is pay - therefore no adspend or broadcast outside primetime - therefore no adspend.

It is time to look at attacking that adspend now reserved only for the main TV broadcasters. There is a plan: Community TV broadcasters, at least those in Jo'burg and Cape Town do pull audiences - both these claim a weekly audience of 1,3 million viewers - not sure about the double/triple counting here but it represents a significant audience - trouble is this viewership is not converting to discernable AR's. The funding these poor operations get for what they have to do wih it would make a member of the IPO blush... All of their adspend is pretty low level and caught up with the Corporate Social Investment "shpiel". But these operations rely on advertsing for their continued operations. They do have something valuable - a free-to-air frequency, flexibility to put the best stuff in primetime and a licence mandate to promote SA's film making talent.

It seems to me that we have the beginnings of a match. Combine the right financial structuring mentioned by Richard (DTI, s24F, rebates, co-production treaties) around great stories. Then, JV the (In SA only) distribution - i.e. primetime broadcasting and adspend to deliver the required AR's. Then, as long as there is consistent quality, go and get some of that relatively uncontested TV adspend. None of the community TV broadcasters want your IP or international distribution rights and securing AR's may be just the fillup needed to demonstrate the value of the work for international distributors.

Just some thoughts to keep the discussion going (and tails up?)
Thanks so much for continuing the conversation Dirk. I don't think that there is huge film and broadcast industry representation here on Silicon Cape. I find that this is part of the problem, too many filmmakers and content makers don't take enough interest in the business or a entrepreneurial approach to solving these problems.

Great input. I'm going to put some more thoughts together over the next week or so, it's been quite some time since the original thread started and I for one have had some new ideas in this time.


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