Vastly underscreened and with a fast-rising economy, Brazil has astonishing growth potential. But can the burgeoning film market overcome chronic piracy? Elaine Guerini reports.
With strong and stable economic growth, Brazil has massive potential as a film market. The economic prosperity that has flourished under Luiz Inacio Lula da Silva’s government since January 2003 has led to rising incomes, lower unemployment and has seen more than 35 million people lifted into the middle class, expanding the territory’s consumer market. Brazil hosts the 2014 football World Cup and the 2016 Olympic Games, which will give the territory a further financial boost and improve its infrastructure.
As the economy grows — Brazil’s GDP is expected to increase 6.5% this year — so does the film business, though it needs to address two major challenges to reach its full potential. One is chronic piracy, with 59% of all DVDs being pirated copies, according to the Film and Music Piracy Association (APCM). The other is a shortage of screens: Brazil has one of the lowest per-capita screen ratios in the world, with 2,096 screens for a population of 191,480,630 — just one screen per 91,355 people.
“Because Brazil remains a vastly under-screened country, there are huge opportunities for building successful new cinema complexes to match this potential demand,” says Steven O’Dell, senior vice-president of Sony Pictures Releasing International. “Brazil is one of the markets in the world with the most promise for growth for our industry. If this growth successfully reaches more economic classes which right now can’t afford to go to the cinema — and we’re talking about tens of millions of people — we could see incredible growth and bring entire new audiences back to the movies.”
The rising purchasing power of the lower classes — created by Brazil’s economic boom and government social-security programmes — has already been reflected at the box office in recent years. According to Filme B, which analyses Brazil’s theatrical market data, ticket sales for the first half of 2010 amounted to $319.5m (real561.9m), up 20% on the same period last year. In 2009 Brazil’s overall box office registered a 33.3% rise year-on-year, with ticket sales moving close to the $569m (real1bn) mark for the first time in history. With an average ticket price of $4.87 (real8.61), the box office is expected to break the real1bn ceiling in 2010.
Besides the healthy economy, other factors which have stimulated growth include the success of 3D, with tickets priced 30% higher than 2D, and a number of local hits. Daniel Filho’s Chico Xavier, about a Brazilian spiritual medium, is the latest local box-office sensation, with a gross of $17.1m (real$30.2m) since opening at the beginning of April. Filho’s romantic comedy sequel If I Were You 2 grossed $27.8m (real50.5m) last year to become the highest grossing Brazilian film of the last 15 years.
The pirate threat
The large potential for growth is overshadowed by the territory’s rampant piracy, however. Although the government is making progress, counterfeit goods are available everywhere, on street corners and market stalls. According to APCM, 45.5 million illegal products were confiscated last year including 13 million DVDs, a rise of 48.1% on the number of films seized in 2008. And piracy is not just limited to physical formats. In a territory with 15 million broadband users, more than a million links to film and music content were removed from the internet last year, thanks to APCM monitoring.
“It remains the key threat to our industry, especially in Brazil,” says O’Dell.
The studios are collaborating with the Brazilian government to combat piracy, according to Jorge Peregrino, Paramount Pictures International’s senior vice-president of distribution for Latin America and the Caribbean. “Perhaps the most important result so far was to create, within the government itself, the awareness that piracy, before being a social problem, is organised crime,” says Peregrino.
With the help of national cinema agency Ancine and the Ministry of Justice, the government is formulating a national strategy to combat piracy, with a publicity campaign focused on the concept of “the original Brazil”.
“The idea is to stimulate the consumption of original and legal products, sending the message that any act of piracy represents the corrosion of wealth and loss of talent in the creative process in the country,” says Manoel Rangel, president of Ancine.
APCM also has an anti-piracy training programme, in association with ABES (the Brazilian Association of Software Companies) and support from the National Council to Combat Piracy (CNCP). “The goal is to train public officials to identify pirated products and address issues relating to legislation. About 3,500 public officials have been trained in all Brazilian regions,’’ says Antonio Borges Filho, APCM’s executive director.
Ancine’s Rangel says the problem must be tackled vigorously, given that DVD is a key market for the industry in Brazil. “It’s also important to create mechanisms to stimulate video stores, so they remain faithful to the legal product, and establish a strong bond between distributors and stores,” he says.
In Brazil the DVD rental sector has suffered most, showing a cumulative drop from 2006 to 2009 of approximately 60%, according to national association Brazilian Union Video (UBV). Unlike other territories, Brazil’s DVD market was largely based on rentals rather than sales, and approximately 7,000 video stores have gone out of business since 2006.
Distributors have also been affected. “We have to reinvent ourselves because DVD used to be our main income source,” says Marcos Scherer, CEO of Imagem Filmes, which was the second-largest independent distributor in Brazil last year with a 6.2% market share. “Now we have to do better theatrically, which has made us bet more and more on the genres that really work at cinemas,” he says, adding that romantic comedies, action, adventure and films with big stars are the most commercial genres.
Imagem and other local distributors generally acquire films for the Brazilian market only, given the cultural differences between Brazil and other Latin American territories. Unlike other markets, foreign films are not dubbed since Brazilian audiences are used to subtitles (only children’s films and some blockbusters tend to be dubbed into Portuguese). Arthouse screens are concentrated in big cities such as Sao Paulo, Rio de Janeiro and Brasilia.
Theatrical distribution still faces a major challenge because of the per-capita screen deficit in Brazil, especially outside the main urban centres where most new cinemas are built. In June, the government launched a $284.4m (real$500m) credit line to encourage investment in cinemas. Named Cinema Near You, the credit line is designed to promote cinema construction in towns of 100,000 to 500,000 people or in areas with large concentrations of the new middle class in Brazil.
“This programme will result in 600 new screens in four years’ time,” says Ancine president Rangel.
According to Filme B, the states best served in terms of screens are Distrito Federal (home to the country’s capital, Brasilia) with 28,031 people per screen — followed by Sao Paulo with 56,613, and Rio de Janeiro with 62,786. The worst ratio is registered in Alagoas state, with 631,222 movie-goers per screen.
Foreign investors are already active in Brazil’s burgeoning exhibition sector, including the US-owned Cinemark, Brazil’s largest cinema circuit and the Mexican chain Cinepolis, which opened its first theatre in June and has further plans for expansion.
“With almost 200 million inhabitants, we believe the country has potential for 6,000 screens,’’ says Cinepolis Brasil president Eduardo Acuna. “The Brazilian market will grow at a good rate in the coming years, which makes this the best time for its industry.’’
Brazil in numbers
Population 191.5 million
Key cities Sao Paulo (population 11m), Rio de Janeiro (6.2m), Salvador (3m), Brasilia (2.6m)
GDP (2009) $1.8tn (real3.1tn)
Per capita earnings (2009) $9,301 (real16,412)
Number of theatres 633
Number of screens 2,096
Number of 3D screens 148
Number of digital screens 177
Average ticket price $4.87 (real8.61)
Sources: Brazilian Institute of Geography and Statistics (IBGE), Filme B
Key Brazilian distributors by 2009 market share*
Fox Brasil 26.4% market share
Head Patricia Kamitsuji, general director
Releases All Fox titles and local films including If I Were You 2, O Grilo Feliz E Os Insetos Gigantes, Me And My Umbrella and Nosso Lar.
Head Rodrigo Saturnino Braga, general director of Columbia TriStar Buena Vista (which includes Sony and Disney in Brazil)†
Releases All Sony titles and local films including Chico Xavier (in association with Downtown), O Menino Da Porteira, Once Upon A Time In Rio and Broder!.
Warner Bros Pictures International 11.6%
Head Jose Carlos Ribeiro de Oliveira, general director
Releases All Warner titles and local films including A Mulher Invisivel, The Famous And The Dead, As Melhores Coisas Do Mundo, O Contador De Historias and Lope.
Head Rodrigo Saturnino Braga, general director of Columbia TriStar Buena Vista (which includes Sony and Disney)†
Releases All Disney titles plus local films including Besouro, The Two Deaths Of Quincas Wateryell, High School Musical: O Desafio (the Brazilian spin-off from the franchise) and O Bem Amado.
Paris Filmes 6.9%
Head Marcio Fraccaroli, CEO
Releases The Twilight films, The Runaways, The Killer Inside Me, You Will Meet A Tall Dark Stranger and The Ghost Writer.
Paramount Pictures International 6.8%
Head Jorge Peregrino, senior vice-president of distribution for Latin America and the Caribbean
Releases All Paramount titles and local films including Coracao Vagabundo; A Suprema Felicidade; Raul Seixas — O Inicio, O Fim E O Meio and Aparecida, Padroeira Do Brasil.
Imagem Filmes 6.2%
Head Marcos Scherer, CEO
Releases The Kids Are All Right, Killers, The Switch, The Extraordinary Adventures Of Adele Blanc-Sec and Capitaes Da Areia.
Universal Pictures International 6%
Head Jorge Peregrino, Paramount’s senior vice-president of distribution for Latin America and the Caribbean††
Releases All Universal titles and local films including Adrift, Surf Adventures 2 and Bela Noite Para Voar.
PlayArte Pictures 4.8%
Head Otelo Bettin Coltro, executive vice-president
Releases Include The Illusionist, [Rec] 2, Bright Star, Smoke Gets In Your Eyes and Xuxa Em O Misterio De Feiurinha.
Europa Filmes 1.8%
Head Wilson Feitosa, president director
Releases Include The Secret in Their Eyes, Sonhos Roubados, Veronica, Cold Souls, Cabeca A Premio and Federal.
Heads Bruno Wainer, president of Downtown, and Sergio Sa Leitao, president of RioFilme
Releases Include Diva, Historias De Amor Duram Apenas 90 Minutos, Malu De Bicicleta and From Beginning To End.
† Columbia TriStar Buena Vista handles releases for both Sony and Disney in Brazil. Sony and Disney also acquire and release local films separately.
†† Paramount handles releases for Universal in Brazil. Both companies acquire and release local films separately.
*Source: Filme B