South African rugby has become "diluted" with six teams in Super Rugby and the revamped format for 2018 could bring greater quality for the Springboks, says Jurie Roux.
The South African Rugby chief executive was speaking after SANZAAR announced the plans to change Super Rugby from an 18-team competition to 15 next year.
Under the new guidelines South Africa will only have four representatives in the tournament, meaning two will be cut.
Roux acknowledged the reduction in South African teams was "unavoidable" after struggling for competitiveness in recent seasons.
In 2016 only Lions made it through the quarter-finals, and they were eventually beaten 20-3 in the final by Hurricanes.
Of the South African franchises only Bulls have won the Super Rugby title - on three occasions - and their last success came seven years ago.
"The 18-team Super Rugby competition has not worked and we had to face up to that hard fact," said Roux in a statement.
"The integrity of the format and the lack of competitiveness in too many matches were major issues that needed addressing.
"From a South African rugby high-performance perspective, we've had to acknowledge that the dilution of talent and resources across six franchises – at a time when rand weakness has led to more departures to Europe and Japan – has seriously affected our ability to compete across the board.
"As a rugby nation, we need several strong franchises all of whom are in with a serious chance of challenging for the title and we could no longer say that.
"A reduction in the number of South African franchises was the unavoidable conclusion, especially when put in the context of SANZAAR's long-term strategy of adding to our tournament's appeal and commercial success which, in time, will mean greater returns for SA Rugby.
"Retaining a number of under-performing teams in Super Rugby makes no sense from a high performance or financial point of view. We no longer have the resources to support them to the required level."
The six franchises will have until June to stake their claim for a place in the revamped format of the competition.