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In Brazil, Co-Productions and OTT Provide Stability in a Tumultuous Time

One of the first measures enacted by Brazilian president Jair Bolsonaro, who took office on Jan. 1, was to merge Brazil’s Ministry of Culture with a newly created Ministry of Citizenship, embracing sports, communications, social policy and culture.

While performing artists came under fire from Bolsinaro supporters in the runup to the elections, subject to threats, pickets, and a smoke bomb, it remains to be seen what impact the new government will have on the film industry.

By mid-January, trade bodies were reaching out to key governmental figures to guarantee the continuation of policies for promotion, investment and control of the industry, the creative industries being the second-most popular career choice in Brazil, says producer Fabiano Gullane.

“It’s illusory to think that Brazil’s film industry can do without subsidies,” says Leonardo Barros, at Conspiraçao, one of Brazil’s biggest film-TV producers. “You’d need a 30%-35% market share to start reducing them.”

But as direct incentives to the film industry are cut in other countries, Brazil’s film producers are rapidly diversifying their revenues. That’s one mark of how TV, and more especially OTT, are transforming Brazil’s content industries rather than any sudden reaction to Bolsonaro’s election victory.

“We’re growing exponentially, developing different business models, and changing the tire as we’re driving the car,” says Rita Moraes at Los Bragas.

Much of that must be put down to streaming services. Netflix entered Brazil earlier than in other international territories, in 2011, just as new regulation obliged pay-TV channels to air 3.5 primetime hours of domestic content weekly.

Ampere Analysis estimates that Brazil is now the ninth-biggest OTT subscriber market in the world, with 9.4 million clients in fourth quarter 2018.

The impact of Brazil’s OTT business has been “highly positive and very noticeable,” says Gullane. Once a pure-play movie producer, Gullane now produces 50% for cinema, 50% for TV/OTT.

“The OTTs have grown into important partners,” adds o2 Filmes’ Andrea Barata. “Since competition has increased in Brazil, good projects are in a better position in terms of financing because we now have buyers and a lot of competition.”

So producers and creatives are starting to mix it up.

Felipe Braga co-wrote “Marighella,” screening out of competition at Berlin, as he directed feature doc “Principal Dancer” for HBO, while building Los Bragas, the first company in Brazil to score two Netflix commissions: “Samantha” and “Sintonia.”

The influx of OTT financing is bringing a business edge to the industry. “Producers are starting to perceive themselves as business people … More than just working on projects, [they’re] creating companies with strategies and growth plans,” says LB’s Moraes.

This comes as companies and institutions continue to explore equity finance and foreign investment.

Conspiraçao, one of Brazil’s biggest film-TV production houses, is finalizing private equity co-funding for romantic comedy “LOCA,” from Claudia Jovin, says Barros.
Traditionally in Brazil, most go-ahead companies have sought equity investment on a film-by-film basis via international co-production.

Brazil released on average six international co-productions over 2005-10, 13 from 2011-16. Anecdotal evidence suggests that since then numbers have climbed higher.
Cinema do Brasil, Brazil’s international promotion program, is looking to “open companies up even more to the international market and more diverse and autonomous financing sources, enhancing co-productions and partnerships with private investors and funds,” says executive manager Ana Leticia Fialho.

In 2019, for example, it intends to increase the presence of investors and overseas funds at the Audiovisual Ideas Market during the Sao Paulo Intl. Film Festival, which it co-organizes.

It’s not just that companies are co-producing more, but also doing so on bigger projects. Gullane, for example, is co-producing Marco Bellocchio’s “The Traitor,” with Italy, France and Germany, “Noah’s Ark” — Brazil’s biggest animated movie — with Canada; and “Neon River,” from Karim Aïnouz, a Brazil-Germany-Japan co-production.
Recife-based Rachel Ellis produced Gabriel Mascaro’s first fiction feature, “Autumn Winds,” out of Brazil; the second, “Neon Bull,” with Uruguay and the Netherlands; and “Divine Love” with producers in five other countries. That’s not just a financing model but one way to ensure not only higher production values but that directors get to make films with the resources they require.

As talent becomes the business’ most-valued asset class, Rodrigo Teixeira’s Sao Paulo-based RT Features has gone one step further, producing with well-known filmmakers like James Gray (“Ad Astra”), Olivier Assayas (“Wasp Network”) and Luca Guadagnino (“Blood on the Tracks”).

The OTT revolution raises challenges. “It’s highly welcome. But the streaming services 100% finance projects,” says Barros. “Producers are essentially service companies; give away 100% of rights, can’t build company value by accumulating assets. We ought to find some balance here in the mid run,” he adds.

But Brazilian production has never attracted so much private sector finance in its history.

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