Industry

Despite what many international sales companies may want to believe, the Brazilian theatrical and video markets have, since the end of 1995, been gravely affected by the country's current economic reality. After the consumer frenzy that gripped Brazil at the end of 1994 and for the first eight months of 1995, the Latin American giant started to show clear signs of entering a period of recession which resulted in the government taking steps to control inflation, today standing at around 0.32% a month (it was once over 4% a day) by setting interest rates at 8% or more a month.

Low rates of inflation, combined with high interest rates, have generated unemployment, a drastic fall in consumer demand and high levels of bankruptcies in virtually all sectors of the economy. The country's largest and most industrialised city, São Paulo, for example, had an unemployment rate of 7.65% in March this year, the highest in a decade. It is the current Brazilian economic climate that has caused the negative effects on the theatrical and video industries, and is the scenario in which the Brazilian distributors must release their titles, many of them bought at unrealistic prices at recent markets.

In 1994, after the implementation of the economic measures known as the Real Plan, all sectors of the audio-visual industry entered a boom period. At this time a hot video title was selling around 30,000 units in Brazil and a medium title around 15,000. Even a B title could expect to shift 4,000 units. Today, not even the Majors work with such high numbers.

Buoyed by the initial boom, the Brazilian buyers started a buying war at the main international markets which raised prices to heights never before seen for a developing country. The euphoria did not last long. In October last year, Brazilian distributors got together to discuss their possible non-participation at Mifed in the hope of driving prices down. But the decision came too late, and as many of the buyers already had commitments, the Brazilian presence in Milan was as strong as ever and the prices remained unrealistically high, but were paid.

Since Mifed, the audio-visual markets in Brazil have been suffering the consequences of recession and in São Paulo the video market has been further complicated by the entry of Blockbuster Video, which has resulted in the closure of numerous independent video stores.

It is rare for Blockbuster to buy from the independent distributors, concentrating on stocking titles offered by the Majors. Of the 10,640 video stores that existed in December, more than 10% closed their doors in the first three months of the year and only half of the remaining stores can now be classed as regular buyers of new titles, creating the obvious knock-on effects for the distributors.

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