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An Explanation for the Box-office Flop of Oscar-winner The Artist in Brazil: Ticket Shock

DVD piracy in BrazilSilent movie The Artist may have won five Oscars last night, including Best Picture, Best Director, and Best Actor, but in Brazil – a country of almost 200 million people – only 144,840 people in 51 theatres have paid to watch it, according to Brazzil Magazine.

This may seem like a terrific failure in the cultural taste of Brazilian movie-goers. Language is no excuse because the film has almost no dialogue. Many are asking the question why so few in Brazil have been to see the movie.

But surely the answer is obvious?

Walk down any major street in urban Brazil and there will be a guy on the corner selling DVDs. The going rate is usually three movies for 10 reais. That’s about US$ 2 a movie. Now check out how much it costs to go and watch a movie at the cinema. I looked just now at the cinema inside the Bourbon shopping center in Pompéia, São Paulo, for a ticket for Hugo tonight – normal tickets are 40 reais (US$ 23.5) each .

To be fair, this is an IMAX movie and therefore a little more than a regular presentation, but even so it is a real ticket price for a movie that is on right here in Brazil in a theatre tonight.

So even a person who is fairly honest and doesn’t like supporting DVD piracy has to compare 40 reais to watch one movie in the theater with 10 reais to watch three on DVD – twelve movies for the price of one.

This problem is also compounded by the legitimate DVD market, which is like the legitimate cinema, just overpriced.

The public in Brazil have voted with their feet. Water cannot run uphill… if pirate movies are a twelfth of the cost of the legal version then who will pay the “correct” price. Only those who want the full cinema experience, those who refuse to support piracy at any price, and those who managed to get a date with a girl and know that a pirate DVD will not impress.

I still go to the cinema myself and I like the communal, inclusive experience… being surrounded by that big Dolby sound and hundreds of other people all watching the same movie, but I don’t watch every single movie in the theatre.

I bought a pirate copy of The Artist – and it was watermarked as a DVD that came from the Academy Award judging process… so one of those judges allowed their DVD to leak and be copied for millions around the world to watch almost for free.

The real answer to piracy is not to go out arresting the guys selling DVDs on the street, it is to make the legitimate route to enjoying a movie easier than buying a pirate – and good value. At present there is no incentive for anyone to keep supporting cinema tickets and legitimate DVDs when they are priced so much higher than the pirates.

Of course the argument goes that if everyone bought pirate films the movie industry would collapse – which is nonsense. It would just move from a model funded by tickets and DVDs to product placement and sponsorship – a process that is already developing anyway. Morgan Spurlock financed an entire film this way in 2011.

Services like Netflix are offering Brazilians unlimited movies for 15 reais (US$ 9) a month. Of course it depends on having good broadband, and many people don’t have the technical ability to hook up a computer to a TV, but Internet-enabled TVs are standard today.

As this latest generation of TVs rolls out with tools like Netflix built-in and on the remote control, it will be easy to click a button to get any movie from a library of millions – easier than going out and selecting from a limited range of pirate DVDs.

And this model is affordable too… that monthly charge is less than half the price of one ticket to see Hugo tonight at the cinema.

The recorded music industry is finally seeing this, with services such as Spotify taking off and killing the illegal copying of music because the legal route is so much easier.

But it took years for the record companies to ever understand that they need a new business model – not more litigation. Let’s just hope the movie business doesn’t make all the same mistakes they did…

Mark Hillary writes about globalization and technology. That means sometimes books, sometimes he writes in the media, and sometimes he teaches MBA students at a number of universities. He’s the CEO of IT Decisions, which is a research company focused on the hi-tech and IT industry in Brazil. To find out more about him, visit his page on LinkedIn – http://www.linkedin.com/in/markhillary

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