Brazil: Strong currency increases buying power but at a cost

Territory Reports

B.O. cume (through September): $221 million
Top title: “The Incredibles” (BVI, $12.3 million)

“Brokeback Mountain” (Europa Filmes)
“Ferpect Crime” (Art Films)
“Good Night, and Good Luck” (Paris Filmes)
“The New World” (PlayArte)
“Vers le sud” (Imovision)

“Arido Movie”: The latest from helmer Lirio Fereira (“Perfumed Ball”), co-directed with Paulo Caldas. Pic, set in Brazil’s impoverished northeast, concerns a TV talkshow host who returns home for his father’s funeral. Screening at AFM. (Sales: Grupo Novo de Cinema e TV)
“Delicate Crime”: Helmer Beto Brant’s fourth feature, pic’s a departure for the thriller maestro: an intimate drama centered on the relationship of a critic and a handicapped nude model. Cast includes Marco Ricca and Lilian Taublib. Pic recently won director and Fipresci kudos at the Rio Film Festival. Screening. (Sales:Grupo Novo de Cinema e TV)
“Underground Game”: Helmer Roberto Gervitz’s feature, based on a short story by Argentinean writer Julio Cortazar, follows a pianist who creates a game to find the woman of his dreams in Sao Paulo’s subway system. Cast includes Felipe Camargo, Maria Luisa Mendonca, Julia Lemmertz and Daniela Escobar. Screening. (Sales:Grupo Novo de Cinema e TV)

RIO DE JANEIRO — Thanks to the strengthening of the local currency, Brazilian independent buyers are making the AFM trip with a little more cash in their pockets. But it could be a double-edged sword.

Over the past 18 months, the Brazilian real appreciated some 21% vs. the U.S. dollar. With many companies feeling flush and several newer, inexperienced players heading for the Santa Monica market to get into the game, pic prices for Brazil are soaring, according to local independent distribs.

“It is cause for concern. Sellers are selling for the prices they want, sometimes three or four times higher than the usual,” says Europa Filmes general director Wilson Feitosa, adding the price increase began about a year and a half ago.

This price spike arrives as the local B.O. is suffering a downturn. The estimated 20% slide so far this year in Brazil is affecting majors and independent distribs alike.

But the rapid expansion of the DVD market is compensating for losses in theatrical. The disc boom was expected, but it is exceeding all estimates. Analysts project DVD rentals to rise more than 30% this year; sell-thru is expected to increase almost 80%.

“It is the DVD market that is paying our bills,” says Marcio Fraccaroli, general director of Paris Filmes.

Some independent distribs are skipping other windows and focusing on the direct-to-DVD market.

But theatrical continues to play an important role for higher-profile features, not only because a release gives it more exposure for the homevid release but because some titles perform well in the theaters. Among the recent examples, were three titles handled by Europa this year, “Million Dollar Baby,” “The Grudge” and Germany’s 2004 Oscar-nominated Hitler pic “Downfall.” Trio helped Europa lead the independent distrib rankings in the first half of 2005.

Meanwhile, the independent distributors continue to make sales to pay TV nets. But the free-to-air TV market remains virtually closed off to indies as all top nets have volume or output deals with U.S. studios.

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