Brazilan theaters increasing in numbers

Government program extends credit to exhibs willing to build

"We don't have a distributor," proclaims director and producer Jose Padilha. "We own the movie completely and we are like four people. Basically this a very small company is making the biggest Brazilian release ever."
Padilha and his Zazen Productions plan to self-release the highly-anticipated "Tropa de Elite 2" (Elite Squad 2) this October on 600 screens in Brazil, making it the widest domestic rollout in 20 years.

Padilha will be proven either brilliant or reckless, since playing with the distribution process has also involved some risky tinkering with Brazil's traditional model of financing.

Padilha believes there "should be a different model in which producers control the distribution of the film" since in Brazil producers usually risk more than distributors — even though the way profits are divvied up suggest the opposite.

Regardless of how well Padilha's master plan plays out, Brazil's exhibition landscape is experiencing a massive expansion after decades of insufficient screen numbers.

Mexican exhibitor Cineopolis, new to the territory, leads the charge, recently committing to invest $284 million on 290 more screens in the next two years.

Hoping to cultivate growth on its own, the Brazil government has launched the Cinema Near You program, which will specifically address the lack of screens in smaller to mid-size cities and blue collar neighborhoods. Many of these areas saw theaters shutter back in the 1970's, a time when Brazil had close to 3,000 screens. That trend, driven primarily by the proliferation of televisions and rising ticket prices, eventually led the number of screens to dwindle to a meager 1,000. Since then the market has managed a slow but steady rebound and is back up to 2,096 commercially active screens as of 2009.

Cinema Near You extends low-interest credit lines to national exhibs willing to build in three categories: Districts with less than 100,00 inhabitants; towns with populations between 100,000 and 500,000; and neighborhoods within bigger cities that contain a heavy saturation of middle-class residents but have poor access to theaters. The goal is to have 600 new screens built in the next four years.

Elsewhere, in July the Brazilian government — with President Luiz Inacio Lula da Silva's support — also announced it would work to actively keep already existing theaters on the verge of being sold out of the hands of those that would like to convert them into evangelist churches.

While current exhibition leader and original modernizer of the Brazilian cinematic experience Cinemark has not been scheming as ferociously as Cineopolis, it is still number one at 428 total screens to date, with another 11 due to open by 2011.

However, Pedro Buchter of the leading domestic movie trade Filme B reports that "Cineopolis seems to be consistently outbidding Cinemark" for rights to insert multiplexes into some of the 70-plus new shopping centers that will open within the next 3 years.

Buchter also reports that at the time of the release of "Avatar" there were only 70 3D screens — now there are 161 with a total of 200 expected by year's end.

Even if Padilha's strategy to circumvent distributor fees doesn't pay the dividends he hopes it will, the new model could still very well be "a way to make Brazilian films more sustainable than they are today."

Either way, all signs suggest that with Brazil's booming economy and an expanding middle class with increasing levels of disposable income, more screens and greater access to them means future profits for distributors both Brazilian and foreign are poised to soar.
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