With 209.2 million inhabitants and 161.1 million admissions, Brazil is an influential market for the motion picture industry. Local production is booming, and the number of screens is at an all-time high. However, growth has been hampered by an unstable political climate and an economic crisis that has plagued the country since 2015. A recent seminar in Los Angeles addressed these issues, organized by the Brazil California Chamber of Commerce. Boxoffice spoke with Marcelo Lima, CEO of the cinema trade show Expocine and Tonks, a leading digital service provider for exhibitors in Brazil and Latin America about the opportunities and challenges that face the Brazilian market.
2018 wasn’t a great year for the Brazilian box office. What were the causes behind that and what is the outlook for 2019?
Brazil is in the middle of an economic crisis and last year we experienced unusual events during the year. We got a huge truck drivers’ strike that lasted two weeks. For two weeks, the entire country stopped. We also had our federal election and it was a World Cup year. No one wants to go to the cinema when the World Cup is going on, especially in Brazil. Because of that we can say that we lost at least two months in revenue at the box office.
We are expecting a better 2019. We are always debating if 2019 be better than 2017, because beating 2018 is easy to do. We did well with Captain Marvel and Avengers: Endgame. We are going to have a good slate in domestic content with the second part of Nada A Perder (“Nothing to Lose”). It’s a movie from one of the biggest Evangelical churches that we have. We have The Lion King, coming up, so this year will be much better than last year. Our biggest challenge isn’t so much the box office, but how many screens and sites we’re going to have in the near future. Especially with this new government.
How has the new political climate impacted this? There have been several of subsidy cuts and it’s an industry that relies a lot on public funding, right?
On the production side, yes, a lot. On the exhibition side, not too much. If you are a tiny, exhibitor you have lots of incentives, but that’s just a few. So, when we take exhibitors that have more than five or ten screens, they don’t have many incentives. The only incentive that they have are some tax cuts for them to import some tech products like projectors, sound systems and sound devices. The government didn’t cut anything from that. The problem that we have is, as we are in the middle of the economic crisis and cinemas in Brazil depend on opening new sites inside shopping malls, no shopping malls are opening.
What we are seeing is that some exhibitors decided not to wait for new shopping malls. Some exhibitors are starting to open cinemas on the streets. It’s working well. So, it all depends on the rest of exhibitors to have the same view that they don’t need to depend on shopping malls and that they can open cinemas outside shopping malls. The problem with is that they are still thinking, when we talk about street cinemas, that they’re cinemas from the 1970s and 1980s and that’s not the case. You need to have a good parking lot and the cinema in the middle. We’ll be discussing this in some panels at Expocine, to show that it is possible to grow your circuit without depending on shopping malls.
Is that a trend that you’re seeing for smaller exhibitors or for bigger circuits ?
All of them. Of course, Cinemark and Cinepolis are the biggest and they have one third of the screens in Brazil. They are the first ones that the shopping malls look for. But they also can open outside. They haven’t started doing that. But as the medium size circuits are starting to do that, they are probably going to do the same because we have a market, a very good market and we can see this with the box office. When you have a good slate like this year’s, with Avengers, The Lion King, Captain Marvel and some other domestic products, it is possible to grow. It’s more like they have some kind of bias in not seeing that it is possible to open cinemas outside a shopping mall or some other big building.
In the U.S. and other markets, cinema circuits try to combat what they see as declining attendance by offering more premium amenities. Is this also taking place in Brazil despite the economic crisis?
It depends because it’s too expensive and we have some problems with importation taxes. For example, immersive seating probably would work well in big cities. When we are talking about PLF, you’re talking about the 4K projectors or immersive sound, it’s easier because you can buy some products that are domestic, like speakers. We have two or three good Brazilian manufacturers that make speakers and not just foreign companies.
Brazil had a big presence at Cannes, and local production this year was higher than ever before, but at the same time we see that there are currently issues with filmmakers and the government. How is this impacting local production and, in turn, the box office?
I don’t know if you remember when there was a writers’ strike here in the U.S. I believe it was in 2007. There was a strike here and no one felt anything, and they stopped writing for two or three months. The real problem took place the next year. The following year there was no product, neither TV shows nor movies for cinemas. All the products they are releasing this year, they were made using incentive taxes and city government incentives from last year. We are probably going to see the effect of these political decisions on the number of films and other content next year.
For this year, we have a good number of products with public and private investments. One good thing is that we have companies like Paris Filmes, who know how to make and release a successful movie. These guys will know how to make new movies without using tax incentives. Of course, we are not going to have more than a hundred projects a year, but probably much more than when we just relied on public incentives.
Do you see any differences in the box office performance of domestic content and other, mostly North American, global content?
It depends on the kind of the product. Paris for example, they know how to make movies. I would say that they are working with a Hollywood way of working. For example, this year they are going to release Nada a Perder part two, the evangelist movie. They’re going to make Turma da Mônica, our most read comic book for which they just created a live action adaptation. They will release it together with The Secret Life of Pets 2. it’s hard to say, because we are talking about three kinds of content: comedies, adaptations from books and comics,and we also have movies for church-goers. It will be a curious year.
There was a lot of talk in the conference about streaming platforms and their impact on production. How can the theatrical industry better compete with those?
That is a hard question. I believe that the two can work together, but I don’t know how. I believe we as exhibitors have to be less arrogant and understand how we can work together. For example, we just got “Game of Thrones” and I believe that if we could show “Game of Thrones” in cinemas 24 hours before it aired, it would be a big hit with just one or two shows a week. 24 hours later it would be released on HBO. There is some content that can work without windows and there is other content that needs to work with windows. I can’t imagine, for example, Avengers being released today and then appearing on a streaming platform just one or two weeks later. We have to wait on that. Among Among the streaming platforms that we have right now, there’s only one that is arrogant, Netflix. We are in the middle of a transition and we don’t know what’s going to happen. What I can assure you and everyone, is that cinemas will never die.