New incentive boosts local films' market share

RIO DE JANEIRO — Crisis was not a word commonly heard this year among producers here. The Brazilian pic production sector is not only celebrating a B.O. surge but also the kickoff of a new incentive, Sector Fund (Fundo Setorial), which is pumping coin into the production and distribution of local pics.

The local production sector, which is highly dependent on incentives, received a total of 160.2 million reais ($89 million) through various incentive programs.

The Sector Fund recently announced the first batch of companies and projects that will receive some $16.3 million from the new incentive. Manoel Rangel, president of Brazil’s Cinema Agency (Ancine), says a second announcement will take place by the end of this year, when another $24.7 million will be awarded.

What is not clear is whether the entire $41 million from the Sector Fund will be in the pockets of producers and distributors this year, as bureaucratic and legal obstacles may slow down the disbursements.

The Sector Fund also represents a change in the philosophy of incentives in Brazil, say government officials and industry execs. The bulk of the country’s traditional incentives are vital donations of taxpayer money — and worked well in kickstarting a moribund biz in the early 1990s, but most of those films were targeted at the arthouse crowd and the fest circuit.

The Sector Fund, Rangel says, was designed to boost the local pics’ market share at the box office and is an investment trove that seeks projects with market potential. The fund buys shares in the pics or in the pics’ distribution rights and will tap into the films’ revenues to recapitalize the fund.

The fund has two other guidelines that are key to strengthening local commercial pic production, Rangel says.

One is that it seeks to cover budget holes in ongoing productions, such as pics that are lensed but need coin for post-production. With this measure, Rangel believes the average duration of a feature production in Brazil will fall from the current three years to one and half or two years.

The other important Sector Fund guideline is the focus on production companies with portfolio of pics (as opposed to small companies with individual projects), which allows them to maximize investments in infrastructure.

The government says the fund will invest another $41 million next year and is considering extending the investment to the exhibition sector, plus it might create a special line for international co-productions.

“The Sector Fund has a different conception from the traditional incentives, and I believe a better one,” says Jorge Peregrino, Paramount Pictures Intl.’s sr. VP for Latin America. “This is really the first incentive designed to help commercial films.” He adds that he favors the continuation of traditional incentives as a means of funding arthouse or niche pics.

Peregrino points out the strong B.O. performance of local pics this year is not related to the Sector Fund, which will begin to impact the market in 2010. Even with the traditional incentive system, he believes local producers have increasingly become conscious of the necessity of making pics that meet moviegoers’ desires.

In fact, four popular comedies — Daniel Filho’s “If I Were You 2,” Jose Alvarenga’s “Divan,” Claudio Torres’ “The Invisible Woman” and Alvarenga’s “So Normal 2″ — pushed local pics’ B.O. take to $59 million in the January-

August period, up 167% from the same period last year. The overall market has also grown in the period, but at a much more reasonable rate of 30.6%.

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