The main objective of this study is to produce a visual map delineating the structure and relationships and value chains that characterise the South African animation sector.
Overview
It is said that the world is in a grip of an “animation boom” (Forrest, 2021). This is related to an increase in the consumption of digital content in the wake of lockdowns caused by the Corona pandemic (BDO 2021: 4). Netflix alone saw 16 million new signups for its service in the first three months of 2020.
Currently the South African animation sector is not able to exploit this situation.
South Africa’s animation sector is small and is struggling to break into longer-form original content creation. 69 animation studios were identified in South Africa, the majority of which were established after 2010. Only a small percentage of South African studios are producing animated films and series. These studios tend to be the larger ones with the highest profiles, evincing the industry to be one that conforms to the ‘winner takes all’ model. The production of animated films and series is dominated by three major players; Triggerfish, Mind’s Eye Creative and Sunrise Productions.
61% of companies claimed on their websites to be involved in the production of animated films and series, yet only 29% of studios have produced animated films or series in the last decade. Since 2010, 44 original animated products were released, 59% of these were series and 41% were films. Most of the animation products that are being made are aimed at TV or online streaming audiences.
The majority of animation companies focus on client-based work for commercials and marketing purposes. Difficulties involved in securing funding or partnerships to realise original animated content has seen most studios offer a wide range of services to generate an income. 32% of the animation companies state that they offer ‘visualisation’ services, which often pertains to explainer videos and other educational filmic products. 16% of companies produce animation for or are involved in the gaming industry.
An assessment of the state and depth of available public funding for the South African animation industry (both government and non-profit) revealed that there is limited funding available for the sector. This is severely constraining growth of its ecosystem. Local studios can’t compete with those in other countries that are subsidised by their governments. 58% of the funding made available to South Africa’s animation industry comes from private sector and self-funding by animation studios while the government and the public sector account for 28% of the total funding.
As tax exemption policies only apply to investors involved in its production it excludes further investment in the marketing and distribution of animated films.
Changes made by the DTI in 2018 to incentives aimed at the film industry at large have made eligibility criteria difficult to meet and are exclusionary on racial and citizenship grounds. Unpaid tax rebates by the DTI to companies that do qualify are sometimes not received or unexpectedly withdrawn.
For South African animation studios, attending film and animation markets did not appear to be fundamental with regards to securing a funder or commission, but rather with regards to networking and building a status around a studio that regularly attended markets. The majority of markets and distributors for animation are based outside the African continent, largely in Europe and the US.
While BBBEE ratings appear (for the film industry at large) to be at 51%, it appears from anecdotal observations that the animation industry remains dominated by white males in terms of ownership. Government policies aimed to address racial transformation of the industry have impeded its growth, of it and have further forced some market leaders to base some of their operations outside the country.
The Copyright Amendment Bill (CAB) and the Performers' Protection Amendment Bill (PPAB) are the two linked legislative bills negatively impacting the animation industry and hampering foreign investment or agreements to produce original content.
Custom conditions tailored to the film and animation industry need to be made to the Basic Conditions Employment Act that take into account that working hours, conditions and other work-related conventions in this industry are particular to it.
There is a shortage of highly experienced animators in South Africa – and elsewhere in the world. Some South African owned animation studios outsource production to studios in other parts of the world due to this shortage of talent, but it also proves to be cheaper.
The recurring sentiment from more established professionals in the animation industry is that the graduates entering it are woefully unprepared. This is largely attributed to the fact that education and syllabus offered by Animation schools and departments is not in sync with the current working practices and technologies. Education professionals argue that poor visual and computer literacy at school level puts most of their students at a disadvantage and has shaped syllabus to compensate for this and limits the level they should be reaching after a three year course. Most institutions that offer Animation studies offer three-year degrees or diplomas in Animation. The average cost of an NQF 6 three-year qualification in Animation is R69 000 per year.
The late approvals for SETA grants and limited eligibility are reversing gains this scheme made in bridging the seemingly widening gap between education institutions and the industry, which is making it difficult for graduates to gain employment and be assets to studios, rather than liabilities.
The majority of animation companies and educational institutions offering a qualification and training in animation are located in Gauteng (38 companies and 11 education institutions) and the Western Cape (30 companies and 6 education institutions) where they have formed clusters.
South Africa’s public broadcaster (SABC) has not been actively commissioning animation products nor has it been on their list of priorities. Nor have private satellite television companies such as Multichoice, which already have agreements with other international distributors of animation such as the Cartoon Network.
Disruptions to the value chain have been made by online streaming platforms as they are commissioning directly from animation studios, cutting out the middlemen that included distributors. There are financial benefits for all parties in doing so, however, this means that animation studios cannot appeal to a third-party to market their ideas or products. TikTok and YouTube have provided animators with new tools to market their ideas, brands, characters, build audiences and self-publish original content. However, revenue for doing so is not sufficient for these tools to disrupt the status quo.
Most animation studios were not as badly impacted by Covid-19 as live-action film ones were, as they were able to continue working from home.
Remote working combined with trends in short-term contracts may have increased the number of freelancers servicing studios. As they tend to be independent, it is impossible to quantify this group or where they might cluster.
The decreasing value of the rand has made outsourcing animation production in South Africa attractive to foreign companies and partners. Conversely, being able to earn foreign currencies by working remotely for studios based outside South Africa is attractive to a pool of highly specialized freelance animators, contributing towards a shrinking group of suitably qualified animators to service local studios.
