After five years of spectacular growth, the Brazilian homevideo industry has become a victim of its too-rapid development and the country’s soaring inflation.

The crunch echoes the worldwide leveling-off in the vid biz, with indie suppliers hardest hit. Some players are predicting a resurgence in Brazil’s $200 million-a-year market, but others have pulled the plug on their operations. The Yank majors, however, seem to be weathering the difficulties.

At least 20 small banners are expected to fold within the next month, and more than 60% of the floor space at the Feb. 1 to 6 Auvicom-Telecom homevid market in Sao Paulo is unsold or has been canceled.

Supplier Herbert Richards recently closed its vid operation, fearing debts could jeopardize its traditional tv dubbing revenue. Also throwing in the towel is F.J. Lucas Video, one of the biggest indies and a major force in theatrical distribution and exhibition in Sao Paulo. Smaller hv distribs such as TEC Home Video and Omni Video also shut down operations.

“It is the worst crisis ever,” said Alberto Bitelli, prez of the Video Distributors Union.

Biggest meet

The Sao Paulo market is the biggest hv confab in Brazil and has grown spectacularly over the past few years into 30,000 square feet of exhib space. In mid-1990, planners thought the fair would be a huge commercial blast for the mushrooming homevid biz.

But the yearend crisis has taken the spirit out of the show. Of a potential 120-plus exhibs, only about 35 had registered by year’s end.

The boom in hv catapulted the number of distribs to more than 80 last October; that number is expected to be whittled down to 30 or 40 by the time of the Auvicom meet. Nearly 2,000 retail rental outlets opened in the course of 1990, encouraged by the government’s economic plan, which for a while succeeded in limiting inflation to only 2% a month.

But as inflation resurfaced, hitting 20% a month, video outlets found they were unable to honor their debts to distribs.

Bitelli averred that sales dropped 40% between August and December, and that many labs are virtually idle.

Another leading distrib, Alexander Adamiu, opined that rental prices (around $1.50 per night) are too low, and that the cost of the official government seal for each cassette (25¢) is too high, especially since this coin is not being used to fight piracy as it ostensibly should.

Suppliers’ trust

A suppliers’ trust is, in fact, claiming the right to set up its own seals.

The crisis, however, seems to be chiefly affecting indie distribs, and not Yank majors, all of whom are now operating in Brazil after years of reluctance. On the upbeat side was Columbia/L.K. Tel topper Phillip Wojdyslawsky, who claimed that all majors are doing well.

“The market has grown enormously, and will continue to do so over the coming months,” he said. In fact, Col/L.K. Tel is preparing to launch a new label, 20/20 Vision, during Auvicom. It will nearly double the company’s production.

Another observer, Roger Divila, topper of the recently created Panamerican Video, commented: “Sales dropped in the second half of 1990, but I believe the Brazilian hv will continue to grow over the next five years.”

Also pooh-poohing the crisis is CIC Video, the first major to enter the Brazilian market, which has just hit the 1 million sold tapes mark and is hawking 800,000 tapes per month.