Brazilian producers may find it easier today to get their films financed but improving local distribution is the next challenge they face. Elaine Guerini investigates.

Boosted by strong government support, Brazil’s production levels have risen steadily over the past 15 years, creating a new Brazilian film renaissance, or ‘retomada’. But with around 80 films produced annually, compared with 20 or 30 a decade ago, producers are finding it tough to recoup in a local market crowded with Brazilian product. As a result, many are looking to the international market.

“After City Of God [which sold 3.3 million tickets in Brazil in 2002], O2 has not had a film that successful commercially in the country,” says Andrea Barata Ribeiro, a partner in Fernando Meirelles’ O2 Filmes. “Nowadays we must count on the overseas market to recoup, even though it’s not a big market for the Portuguese language and non-English [language] in general.” Nevertheless, Barata points out that both Meirelles’ City Of God and his English-language Blindness were sold to almost the entire world and the director’s 2001 picture Maids was acquired by 36 countries.

Edgy film-making

Thanks to Meirelles and directors such as Walter Salles and Jose Padilha, Brazil has built an international reputation as a hotspot for edgy, innovative film-making. The Weinstein Company picked up Padilha’s Elite Squad for the world excluding Latin America at script stage in 2007. More recently, Salles’ Videofilmes signed a development and production deal with StudioCanal, which got underway with Sergio Machado’s The Two Deaths Of Quincas Wateryell.

Any film passing the 2.5 million admissions mark should be able to recoup its production costs from the Brazilian box office, according to Leonardo M Barros, a partner in Conspiracao Filmes, whose credits include Breno Silveira’s Two Sons Of Francisco. “The problem is that only a handful of titles — if that much — surpasses this mark every year,’’ he says. The only Brazilian title to pass 2.5 million admissions so far in 2010 is Daniel Filho’s Chico Xavier, a biopic about the most popular medium in Brazil. Produced by Globo Filmes it has sold 3.4 million tickets.

“Years ago it was practically impossible to raise money for a film,” Ribeiro explains. “Today we overcame that step and the bottleneck is distribution.”

In 2006 the government’s national cinema agency, Ancine, launched the Audiovisual Sector Fund in a bid to improve the market for local productions. With $41.6m (real74m) invested last year, the fund looks to stimulate production, distribution and exhibition. “Our aim is to strengthen all the Brazilian companies in the sector and create a healthy and self-sustaining market,” says Manoel Rangel, president of Ancine.

Unlike Brazil’s tax shelter system —the other major source of finance for producers — the fund’s awards are triggered by a film company’s business performance and the project’s market potential. “The government is now a partner,” explains Rangel, participating in the commercial upside.

The government, through Ancine, is also aiming to attract private investment to Brazilian production through ‘funcines’ — closed funds managed by Brazilian financial institutions which offer private Brazilian investors the chance to participate in enterprises from the audiovisual industry, including production, distribution and exhibition. In return Brazilian investors access partial tax rebates.

The Virtu-Schurmann Cinema fund, for example, was set up early this year to invest in Brazilian films and co-productions. It recently signed a first-look deal with UK-based sales and financing company Salt, which will help Virtu-Schurmann identify and develop Brazilian films with international potential.

While government support has been crucial in resurrecting Brazilian cinema in the last two decades, the majority of films made under Brazil’s tax shelter system have received exposure only at festivals and in arthouses. By encouraging private investment in the production and distribution of local films, the government wants to shift the sector towards a more commercial mindset. “This new fund is empowering the national distributors to compete with the majors for the local high-profile, bigger-budget commercial projects,’’ says Barros.

If effective, the new system will boost the Brazilian market share at the box office, which last year stood at 14.2%. This was largely down to Daniel Filho’s hit If I Were You 2.

“Nowadays the national market share depends on one or two box-office hits to maintain this percentage,’’ says the producer Paula Barreto, from LC Barreto.