Brazil: in top ten in U.S. theatrical biz.

U.S. television sales pale in comparison

Ranked as one of the top 10 theatrical territories in the world and representing 40 percent of the Latin American market, with overall sales exceeding U.S. $50 million, Brazil is currently basking in the sun.

"In a climate like that, there are opportunities to generate some substantial money, both theatrically and on video," said Joe Drake, senior vp of International Sales for Rysher Entertainment. "On big titles, that money could be in the millions of dollars."

Broad physical comedy and fantasy seem to lead the pack in terms of what Brazilians want to see. Dumb and Dumber, The Mask and Casper all exceeded the $10 million mark at the box office. Dumb and Dumber had 2.9 million ticket sales, The Mask garnered 2.4 million admissions and Casper sold 2.3 million tickets.

"An average film in this market grosses between $500,000 and $700,000, and with tickets costing an average of $5 each, these are very good numbers," said Ron Collin, international sales agent for Rysher. Drake shared that opinion: "If you look at the box office around the world, there aren't that many territories that do $10 million in box office. ... Whenever you have a territory that has that kind of theatrical potential, thus impacting the video rental and sell-through market as well as other ancillary beneficiaries, you can be sure we'll pay incredibly close attention to it."

Industry analysts and sales agents see this boom as a solid upward trend that began with the change of currency that took place a few years ago.

This isn't a gold rush, however. There are only 1,100 screens available in Brazil, a typical release consists of 50 to 100 screens and a wide release like Toy Story gets only 200 screens. Thus the competition between distributors for A titles and strong B titles is fierce. "There are a number of very strong distributors there, and while it is a very profitable territory, to do business in, it is also very tough," Drake warned. Said Lars Bjorck, president of Bjorck Films: "There are a lot of Brazilian distribution companies because it's a strong market. However, some of the companies have suffered serious financial losses because they overestimated their projections. Also, it's important to note that while A and good B titles continue to perform well in video and have a strong television potential, the video market for regular releases has been steadily declining since October/November of last year."

U.S. films continue to dominate the marketplace, constituting between 60 percent and 80 percent of film releases, while domestic product represents only about 10 percent. Brazilian film production declined when EMBRA - the government body that subsidized filmmaking - was dissolved. Bjorck, however, doesn't see this as a negative: "I think, as a result, there are more quality films produced now, such as the richly appointed O Quadrilho, Brazil's Academy Award entry."

On the TV side, Brazilian television giant Globo TV dominates the free TV airwaves. Globo, which controls no less than 70 percent of the television market share, has established a virtual monopoly. In addition, Globo enjoys 40 percent of the total TV advertising dollars. The company broadcasts in Portuguese and 90 percent of its programming is developed and produced in-house. An industry insider lamented: "The biggest challenge in selling TV product to Brazil is dealing with TV Globo. It's particularly difficult to sell to Globo because they take a long time to make a decision, anywhere from six months to two years!" Jim Romonovich, senior vp of Associated Television International, said: "Globo is a very powerful network that knows what they're looking for ... They control a lot."

Because of the power it wields, Globo TV has the freedom to experiment with cutting-edge ideas. Early last month, it launched an interactive approach to programming called "Telecine," in which the audience is presented with a selection of potential movies to view the following night; the viewers vote via telephone, indicating what they would like to see, and the majority rules. So far, viewers have embraced the idea.

Giannina Antola, international television sales agent for Rysher, noted that "selling to other territories in Latin America ... offers more options and a little more control than selling to the limited TV market in Brazil." Todd Leavitt, chairman of Alliance Television, commented that "what is going on in the rest of Latin America isn't necessarily mirrored in Brazil."

Alliance execs boast of success in Brazil, saying they consistently sell most of their catalogue there, in spite of Globo's limits on the market. The key to dealing with Globo, according to Leavitt, is to "present them with a plot that's interesting, one that they would like to have, because there are very few North American products that they have to have." Leavitt continued, "If they're interested in buying what you're selling, they'll have a rate card that they would pay, with some negotiation." Rodrigo Pizza, a consultant for Nelvana, said: "Brazil is a booming market for us. We have a lot of projects for that territory right now." He cited Brazil as their number two territory in Latin America, second only to Mexico.

The outlook for Brazil looks promising. According to Romonovich, "The country has curbed their inflation to where they've got it within their grasp." Antola predicts that "the market will open up because cable is growing." No matter how you slice the pie, the fact remains: Brazil is a rich and fertile territory, both in film and television.

RELATED ARTICLE: Rocky Road for Foreigners Wanting to License Merchandise in Latin America

It takes careful planning and solid alliances with distributors to break into the licensing arena in Latin America. Business there is dictated less by the cold profit-driven deal than by the personal relationship. Suffice it to say, the doors are closed unless one has the right friends.

In addition, each country must be treated as its own territory because of different laws and customs. Rodrigo Pizza, a consultant to Canada's Nelvana, said: "It's a nightmare, especially in the animation arena! First of all, each country has their own indigenous characters, which rarely cross borders." Brazil, for example, has many local characters that can spoil the market's appetite for international product. This can be seen with Monica, a show based on a local comic book character; the product is only popular in Brazil and is regarded as the big fish in the food chain of merchandising.

"In terms of product placement, facing different air dates from country to country is unachievable," Pizza noted. "You'll find a lot of agents that license properties locally. There will be some who, in a growth mode, will take two or three countries close to them and open offices close to those two or three countries. Almost immediately, they'll be faced with the inability to handle the three television stations at the same time for simultaneous programming."

For licensing to be successful, one has to rely on free television. And while there are many satellite channels that reach all of Latin America, Globo has the only free television channel that covers all of the nine-country territory. According to Pizza, "only a limited population of Latin Americans can access this channel, and the signal is very small." Pizza continued: "Presently, the way to get to people is through cable, now that they have direct-to-home television. Unfortunately, the penetration is also small, comprising less than 10 percent of the homes; this is dismal, considering it's a territory where every family has a TV."