RIO DE JANEIRO — RioFilme, the biggest – and trend-setting –  city-backed film/TV fund in Latin America, is moving into digital, announcing a new funding line for web content as well as backing for the digitization of five arthouses in Rio.

RioFilme’s final budget for 2014 is R$42.36 million ($16.9 million), not much below the $18.2 million of Paris’ film/TV Ile de France Support Fund. The measures form two of five new incentive lines as RioFilme – whose success has helped inspire Sao Paulo’s own SP Cine fund – sets its agenda for 2014-15. Criteria include a ficus on digital content, a diversification in financed productions, and a balance between economic and culture-driven incentives, RioFilme president Sergio Sa Leitao said at the RioMarket.

Just as Brazil is eying what Colombia is using cash rebates to lure Netflix series “Narcos” to its shore, cities around Latin America looking to fire up their advanced services sector via multi-platform content investment will look to RioFilme’s moves to see what’s now on the cutting edge of big city film/TV policy.

Web content funding, tabbed at R$ 1 million ($325,000) consists in 10 web series. RioFilme has pacted with YouTube for their webcast. YouTube will create a training facility for 110 young professionals. Grant recipients are expected to source completion finance, via sponsors, private or own investment, said Sa Leitao.

Digital is “a kind of a new frontier for our market and we want to put this new frontier under the spotlight with this line,” said Sa Leitao, pointing to success stories in Brazil. One, the Porta dos Fundos online comedy troupe sensation produces weekly YouTube web shorts which have an audience of over 10 million; two of its stars, husband-and-wife team Gregorio Duvivier and Clarice Falcao, now toplining romcom movie “Love Stories” for Gullane.

Any cinema theater in Brazil that sells less than 80,000 tickets a year cannot afford to digitize, he added. So a total $325,000 in grants will be allocated to five arthouses in Rio unable to help cover the costs of digitization over the next six months. A further 10 arthouses will receive funding in 2015, maybe through joint action with Brazil’s federal ANCINE Film Board, per Sa Leitao.

RioFilme will also put up R$3 million ($1.2 million) in matching funds for about six TV projects, co-financed by a pay TV channel. Further investments include R$660,000 for short film funding, and R$4.5 million ($2.7 million) in grants for long features, live-action, animation and documentaries.

Announcement of the last line comes after good-humored protests by a group of cineastes, Rio: Mais Cinema, Menos Cenario, at the lack of city funding for non market-driven movies.

Sa Leitao explained at the Rio Festival that blocked municipal funding until September had postponed a second tranche of measures now announced, including such funding, which is traditionally unveiled in March.

Rio’s overhaul of its arthouse sector is a clear attempt to open up more theatrical outlets to art-pics, domestic and foreign. That has already occurred in Mexico, helping to dynamize its arthouse sector.

Re-booted by Sa Leitao from 2009, RioFilme has invested a total R$ 209.4 million ($83.7 million) in film/TV, production, distribution, development, exhibition, events – such as the Rio Festival.

Freeing up producers from a dependency on federal state funding or Hollywood studio finance to greenlight projects, its investments have played a crucial part in the production of local blockbusters, often comedies, which have powered up Brazilian market share to 18.6% in 2013.

In its movie investments, RioFilme began by investing in potential heavy-rollers, often partering with Brazil’s biggest distributors and top production houses. In 2012, it was involved in the production or distribution –sometimes both – of none of the Top 10 Brazilian films at the box office five broad comedies, led by “Till Luck Do Us Part II” ($16.3 million), distributed by Downtown Filmes and Paris Filmes and produced by Gullane.

Such money was investment, with returns re-invested in RioFilme.

“Our philosophy since the beginning was to reach a balance between economic and cultural criteria, but as a strategy we had to start with reimbursable investment, with economic criteria,” Sa Leitao told Variety.

“We proved that we were viable, that we were successful, we proved to citizens that the audiovisual sector of the city could contribute to the development of the city, creating jobs.”

The 128 films RioFilme’s investid in over 2009-13 helped contribute R$2.2 billion ($880 million) to Rio’s GDP, accounting for 32,000 jobs, he added.

The economic impact of film and TV is now in little doubt in Rio. So RioFilme’s investment criteria can now evolve. One new focus is digital, another a balance between returnable investment and grants and economic and cultural financing, yet another a diversification of the films and TV and web contents in which RioFilme invests.

RioFilme study suggested a gulf between the kinds of films Rio inhabitants say they want to see and, apart from comedies, the kinds of films Brazilian producers make.

“The supply of Brazilian films is totally divorced from the tastes of the public. For instance, the genre that most people want to see, according to the research, is action. And we don’t do action films.”

So, while still observing a mixed cultural/econimic remit, RioFilme wil attempt to finance “more action and adventure and family films.”

Said Sa Leitao: “If we don’t fulfill more the desires of the public, the Americans will, and we won’t be competing.”