Trying to gauge the current state of the South African studio facilities sector can be tricky. On the one hand there are signs of the recession that is plaguing the industry at large. On the other hand a number of facilities have also taken some expansive measures. So where does the sector stand?
At a current estimate, there are around 30 film and/or TV production studios operating around South Africa, mostly in Johannesburg and Cape Town. The majority of these are long-standing facilities that have not seen much change in their business over the past year. There are some, such as Sasani Studios in Highlands North, Johannesburg, that have expanded or upgraded their facilities in the past year. There are also newer, smaller facilities entering the fray, bringing competitive rates and a touch of diversity.
On the whole the outlook expressed by the operators of these studios is guardedly optimistic. Three trends present themselves. On the one hand, there is talk of complete contraction as funding dries up, leading to studios having to accept lower fees or let their production spaces stand empty. On the other hand, there is a second trend, which indicates that an increase in business is expected as the demand for content continues to rise. This will mean more work but the lower fees problem will remain. A third trend, already an entrenched part of some studios’ business models, while others are only adopting it now, is that the weak rand will result in a considerable increase in outlay which can really only be covered by raising foreign currency revenues, ie. marketing to foreign production units as well as – or perhaps, rather than – local ones.
Increased demand… is it enough?
Eileen Sandrock, CEO of Sasani Studios, describes the studio market over the past year as ‘volatile’. “While there has been a lot of interest from the market, budgets are tight, and a number of new studio complexes are emerging which are giving us a healthy run for our money,” she says. The emergence of new players, in combination with shrinking budgets, may lead to studio facilities being in the same boat as several other sectors in the industry, most notably post-production, where the work continues to come in but lower budgets and increased competition means lower revenues all around.
However, in Sasani’s case, the outlook must have been sufficiently bright to encourage expansion. After the company’s oldest sound stage burnt down in September 2014, it was decided, not only to rebuild the facility, but to do so in style. The new Stage 5 is an impressive space to say the least. Currently being used for production of the music competition show The Voice, the state-of-the-art building can accommodate productions on a large scale. It is currently complete with 12 Grass Valley HDX cameras, a 16-camera capacity control room, Soundcraft Vi3000 digital audio mixing desk, 32 audio channels and 12 video channels, collaborative editing on a shared storage system, flawlessly designed and installed soundproofing, production offices, green rooms, dressing rooms and space – lots of it.
The ideal situation for any facility is to source long-term clients, ensuring that studio spaces remain occupied for months, even years. This approach has worked well for Sasani, which hosts a good number of the country’s major soap operas, and for the likes of Telemedia, in Rivonia, Johannesburg which, according to national sales manager Quentin Barkhuizen, kept the majority of its studio spaces occupied for much of last year. Barkhuizen agrees that increased demand for content should lead to steady business for studios.
Trevor Stonebank, acting head of facilities at Urban Brew Studios, is less reserved in his positive forecast for 2016 than Sandrock and Barkhuizen. “This year started with a bang,” he says. “A period that was relatively slow in past years has really been booming for us, with some good long-format prospects, as well as our ventures into the African market with some of our licensed shows. We are really looking forward to a good year ahead.”
Stonebank notes that the booking of long-form productions has its pros and cons. “It is a challenge as one has to weigh up the costs and benefits of removing the studio from sellable inventory for a while, versus the financial stability and the impact it will have of remarketing the space once the long format production has left. At present urbanWorx has a good mix across genres. We do tend to tailor-make each budget to a client’s needs as the broadcasters seem to be really putting pressure on production houses to produce at lower and lower cost per minute.”
While all the comments from Sandrock, Barkhuizen and Stonebank point to the securing of long-term, long-form clients as a saving grace of the studios business, Stonebank’s remarks also touch on another vital survival measure for South African facilities – sourcing business outside of our borders.
Looking abroad
Aside from shrinking funds within the South African industry, one of the biggest challenges to face the industry in the past year has been the devaluing of the rand. “The exchange rate is the biggest challenge to us at present,” Stonebank says. “One day you can place an order and a few days later the price has increased by 30% or more due to the exchange rate fluctuation. The majority of the new technology that we require is not kept in stock here in SA, so we have to put ourselves at the mercy of the exchange rate fluctuations whenever making new purchases.”
Quentin Haffern of Realtime Pictures echoes this sentiment. Haffern recently took the risk of constructing an upgraded, state-of-the-art studio at his base of operations in Linden, Johannesburg. The decision to do so rested on the decreasing returns experienced in the post-production sector, which had previously made up the larger part of his business, despite studio directing being his first love. It was as the building project neared completion, at the end of 2015, that the rand took its notorious nosedive, driving up the costs of the essential gear he needed.
Haffern’s proposed solution to the problem is to try and ensure that a sizeable part of Realtime’s future business comes from abroad – and in hard currency. “Budgets here are just not enough,” he says. “I need to make sure that a good part of my business comes from offshore to cover the unavoidable costs we experience in running a studio.”
Perhaps easier said than done but well within the realms of possibility. South Africa is already a favoured destination for international film and TV creators and the low costs and high standards of production here – relative to the US and Europe – will continue to make it attractive. Facilities such as Cape Town Film Studios and Waterfront Studios have been basing their business on the servicing of offshore productions for a long time already.
With the double-edged sword of increased demand and decreasing budgets, the pros and cons of the weak rand and the mixed blessings of booking long-term studio ‘tenants’, the fortunes of the studio sector – like much of the rest of the industry – are hard to forecast. This truly could be both the best and worst of times.
