Brazil’s indie production and distribution sectors and local exhibitors are pushing its Congress to pass this year VOD regulation that will destine more money for indie productions and establish quotas for local movies and TV shows on streaming services.
They have the backing of President Lula da Silva’s administration but the government does not hold the majority of the Congress, where more than one bill regulating VOD are in discussion since 2017.
In the other corner, Netflix, Amazon Prime Video, Disney+, Max and Globoplay, the streaming service of local media giant Globo, created in March Strima, an association to represent their interests.
More than 750 local producers, directors, actors, screenwriters and other industry workers signed at the beginning of August a public letter in support of Bill 2331/22, which was addressed to President Lula, House of Representative speaker Hugo Motta and other authorities. The list of signees includes helmer Walter Salles and star Fernanda Torres of “I’m Still Here,” helmer Kleber Mendonça Filho and star Wagner Moura of “The Secret Agent” and director Fernando Meirelles (“City of God”).
The letter states “Brazil is currently the second largest global market for international streaming platforms, but it lacks regulatory mechanisms that ensure financial, programming, and intellectual property commitments compatible with that position.”
Bill 2331/22, as drafted by congressional representative Jandira Feghali, establishes that streaming services will have to pay a 6% Condecine tax on their gross revenues in Brazil.
The Condecine revenue feeds into the Fundo Setorial do Audiovisual (FSA), the country’s main incentive fund for indie production that also finances distribution and the exhibition infrastructure.
According to the Bill, streamers will be able to use part of their due Condecine tax to license Brazilian indie content for their platforms. In these cases, the intellectual property of the licensed films and TV shows will remain with the indie production companies.
The Bill also establishes that streamers must have in their catalogs a minimum of 10% of Brazilian content, and establishes criteria of prominence for local films and TV shows, which must be visible on their platforms.
“The strongest resistance to the Bill comes from another very powerful sector, which is also part of this regulation: video-sharing platforms, especially YouTube and Meta. They are also included in the VOD regulation bill, because there is professional audiovisual content being monetized through advertising,” said Gabriel Portela, a specialist on audiovisual public policies who will be a speaker at a panel dedicated to discuss the issue at Expocine 2025, which takes place in Sao Paulo over Sept. 30-Oct. 3.
Congressional representatives allied to the big techs have blocked the bill’s approval in the House of Representatives’ Culture Commission. The most viable option to advance with the bill, said Portela, is to merge it with another bill also dealing with VOD regulation. Bill 8889/17 is in discussion in the House since 2017 and is ready to be voted. In the letter to authorities, filmmakers suggest that Feghali write the final draft of the merged bills.
“The lobbying against the approval of the bill is strong. It won’t be easy. Another complicating factor is that we’ll have presidential elections in 2026 in Brazil, which will heavily engage Congress. So, it’s essential to reach a consensus bill that can be approved this year,” Portela said.
If approved with the 6% Condecine tax established in Feghali’s draft, according to a study of Brazil’s Minister of Economy, there will be an estimated annual impact of about R$4 billion ($727 million) on the indie production sector, said Portela. This amount will be divided in revenues for the FSA and streamers’ licensing for their platforms.
As a reference, traditionally the total amount allocated annually to FSA about R$1 billion ($181.8 million).
Igor Kupstas, director of distributor O2 Play, highlights the fact that it was a mistake not to regulate VOD more than 10 years ago, when the first streaming platforms launched in Brazil.
“It was a historic mistake we made. We should have, in some way, created a structure that somehow regulated these services and provided resources to develop our industry,” Kupstas told Variety.
He also stressed again that the priority is to reach an agreement this year, a consensus set of rules that could eventually be improved.
“I would love to be able to soon have a constructive discussion on how we can make good use of these resources to develop the Brazilian market, improve infrastructure, and produce more films with box office potential,” he added.
The other key point of the VOD regulation, said Marcio Fraccaroli, general director of distribution-production company Paris Filmes, is the exhibition window for films licensed by streamers.
Local exhibitors and distributors complain the streamers’ licensing contracts often cut short the theatrical career of features. Short theatrical windows are a major blow to the exhibition sector, which is still recovering from shutdown during the pandemic.
Bill 2331/22 establishes a minimum theatrical window of 63 days (nine weeks), which represents an improvement in relation to current market practices but is less than what exhibitors and distributors demand.
“The ideal would be a 90 day window. I would go for 90 days. But 75 days is reasonable,” Fraccaroli told Variety. “But what really matters is to reach a regulation agreement soon, which, I’m sure, will be good for our industry but also for streamers, which will have more Brazilian content and attract new subscribers.”
