South Africa

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When the FIFA World Cup kicks off June 11 in South Africa, the country's entire population will be hoping it puts the nation back on the global map -- and no segment more than the film industry.

Hurt by the international recession and by cutbacks in U.S. filmmaking that have limited runaway production in many tax-friendly venues, South Africa has nonetheless made significant strides in recent years, with such studio pictures as "District 9" and "Invictus," as well as smaller releases including "Jerusalema" and "Tsotsi." Now it wants to capitalize on the reputation they have helped it build. But to do so, the country must overcome some notable hurdles.

First, it must manage a tricky balancing act of providing maximum resources for the foreign-based productions that like to shoot here, and yet still devoting enough backing for indigenous filmmakers. Second, it must ensure full financing for the industry -- designated one of a handful of top-priority sectors by the government -- in the face of an economy that has been weakened during the past year.

South Africa was lucky in that its banking and mortgage industries remained fairly stable through the economic downturn. But that doesn't mean the local film business went unscathed. A decline in regional production and a reduced demand for shoots by foreign-financed films hurt the entertainment business, says David Wicht, CEO of Cape Town-based production shingle Film Afrika Worldwide.

"There was also a virtual collapse of local commissions from the state broadcaster, the South African Broadcast Corp.," he notes. "In terms of co-productions and foreign-serviced films, production activity all but ground to a halt as our U.S. and European partners scaled back their slates." Now, however, "South Africa has recovered and is close to pre-recession levels of production," he says.

Adds Eddie Mbalo, CEO of the National Film and Video Foundation: "South Africa was cushioned, in a way, and everyone attributes this to strong economic fundamentals. The local industry was not that much affected, from where we sit."

Now the country is poised to move forward as all signs indicate a shift away from the past year's malaise. South Africa -- and especially Cape Town -- remains a popular destination for foreign-financed production, particularly the sort of midbudget, direct-to-DVD productions that have become a staple of the U.S. studios.

"Streetkids United"
 

Universal, for instance, shoots titles in its DVD franchise series here, such as "The Scorpion King 2: Rise of a Warrior," the recently wrapped "Death Race 2" and the scheduled sequel to "Blue Crush." Their budgets range from $5 million-$10 million. More will likely follow, says Glenn Ross, executive vp and GM at Universal Home Entertainment.

"South Africa was the ideal location to film 'Death Race 2,' " Ross noted at a recent news conference. "The region's great inherent resources, including its highly skilled talent pool and appealing economic incentives, were key advantages."

The country's refund system, the South African Rebate Program from the Department of Trade and Industry, is still a strong lure for U.S. and European productions, and the DTI plans to increase its rebate cap this year -- from 10 million Rand to a reported 20 million Rand ($2.9 million). But there remains frustration over how long it's taking for this increase to be approved.

A Revised Film and Television Production Incentive came into effect in February 2008, replacing the Large Budget Film and Television Production Rebate of 2004. The current incentive is part of the South African Film and Television Production and Co-Production Scheme, meant for South African and co-production projects only.



"A new requirement holds that local-owned productions and co-productions must have at least 2.5 million Rand ($335,000) of total production budget," says Theresa Smith, senior film writer for Independent Newspapers--South Africa. "The rebate increased from 25% to 35% for local productions to prompt higher financial support for local productions."

More foreign productions likely will take advantage of these subsidies if and when South Africa finishes negotiating long delayed co-production treaties with France, Ireland, New Zealand and Australia. These would come on top of existing treaties with Canada, Italy, Germany and the U.K.

The pacts with France and Ireland are particularly critical and have been on the table for many years, says Glenn Gillis, a media strategist with Cape Town-based animation house Clockwork Zoo. While ongoing changes in government have continually delayed the negotiations, some seem poised to close.

"Spud"
 

"The French and Irish pacts are now at the Department of Foreign Affairs," Gillis explains."That is the last part of the formal process which checks on the legalities prior to signing. Australia is quite a bit further behind, but my view is that they should sign off the ones already at an advanced stage before pushing the others. There is business to be done now between South Africa, Ireland and France."

These treaties are pivotal to the long-term success of the local film business, saysWicht: "South Africa has a relatively small economy, and we are forced to think internationally to finance our films."

It's a sentiment echoed by Tendeka Matatu, a co-founder of Cape Town's Ten10 Films and producer of "Jerusalema." "We need to work as international coproduction partners and earn the respect of the sales and distribution industry with our market savvy," he says. "That will allow us to dine at the main table."

In fact, the dining may already have begun.

"District 9," shot in Johannesburg on a $30 million budget, showed just what the local entertainment industry can do if given a chance. The sci-fi hit was made by native writer-director Neill Blomkamp and starred Johannesburg-born leading man Sharlto Copley, along with a supporting cast and crew dominated by locals.

It proved, according to Wicht, that "while South Africa isn't the lowest-cost location, it provides the best value for money with the skills of the local crews across all departments--production, design, construction, stunts, etc."

Adds Michael S. Murphey, the movie's supervising producer: " 'District 9' was the breakthrough because, while many people liked 'Tsotsi' or 'Jerusalema,' neither of those movies is going to draw that key 18- to 35-year-old male audience that everybody in the world wants in order to have a blockbuster."

But success can have its drawbacks. Like other top South African talent--including "Tsotsi"
director Gavin Hood--"District 9's" topliners have been wooed by Hollywood. Blomkamp is in advanced preproduction on an untitled science fiction project; and his star, Copley, recently signed to appear in DreamWorks' sci-fi drama "I Am Number Four."



The brain drain that siphons off top talent may slow plans to further South Africa's indigenous filmmaking. The answer to that problem, insiders say, is to boost subsidies and also provide greater investment in infrastructure.

"To reassure local and international producers, we need to invest in soundstages like the new Cape Town Studios," says Gillis, referring to the $60 million facility in its final stages.

Insiders say the country also needs to invest in nurturing local talent. "There's a disconnect between our ability to service the production of those stories and our ability to participate as owners and co-producers of our stories," Gillis adds.

The government has tried to foster local talent through writers' programs and through an arrangement with the University of Southern California's film school, allowing an interchange between students and professors.

"District 9"
 

For local talent to succeed here, South Africa also needs to develop the distribution and exhibition infrastructure that will allow locals' films to find an audience. Presently, South Africa's population of more than 48 million is serviced by fewer than 75 theater facilities nationwide, run by the country's top two chains, Ster-Kinekor and Nu Metro.

Matatu, however, says there are indications that efforts to improve distribution and exhibition are already having an effect.

"We have recently seen a number of local films taking much higher boxoffice earnings -- such as 'White Wedding,' 'Bakgaat' and 'Skin,' " he says. "With more local films being produced, the expansion of digital exhibition and the ever-increasing appetite for DVD and TV content, there is now a unique opportunity for new independent distributors to enter the market."

To that end, Matatu is shifting the focus of Ten10 Films from production to distribution. "We are releasing two titles at the end of this year and expect to expand to six local titles per year within the next three years," he says.

Gillis supports Matatu's strategy, insisting that South Africa's film sector needs to follow the distribution models of the U.S. and India. "Many professionals say there is a lack of funding to make South African films," he notes. "I don't agree. There's a lack of sales and distribution know-how and infrastructure."

What there is no lack of is ability, says publicist and South African native Joy Sapieka.

"With our superb crews, locations and facilities, we should be able to make low-budget films -- good, clever, theatrical movies that earn enough money to make that next film," she says, "so South Africans have a chance to discover their culture and heritage on the big screen."
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