Emergency Ahead of Summer Peak Season... Pay TV and Theaters Drastically Support Korean Films

Movie Theaters Pay Full Ticket Sales to Distributors Until 50% of Production Costs Secured
Pay-TV Industry Raises Distributor Share to 80%

Movie poster of 'Mogadishu'

[Asia Economy Reporter Cha Min-young] For the peak summer movie season, the Korean tentpole (a key work that supports cash flow for the year) film releases, the paid broadcasting and theater industries have joined hands. Both industries agreed to theatrical releases with unprecedented support conditions for two major films, "Mogadishu" and "Sinkhole."

The Korea IPTV Broadcasting Association (KT, SK Broadband, LG Uplus), the Korea Theater Association (CGV, Lotte Cinema, Megabox), and Home Choice (Cable TV VOD) announced on the 15th that they have prepared support measures for the release of Korean tentpole films. This was the result of multiple discussions with distributors under the mediation of the Korean Film Council.

The theater industry agreed to guarantee the recovery of 50% of the total production costs for the two films. Typically, movie ticket sales revenue is split 50-50 between theaters and distributors, but until 50% of the total production cost revenue is generated, theaters will pay the entire revenue to the distributors. This means that theaters will bear part of the losses if large-scale projects fail at the box office, thereby reducing the distributors' box office risk.

The paid broadcasting industry also contributed. For simultaneous theater and TV screenings, EPVOD products that air immediately after theatrical release, they agreed to pay distributors 80% of the revenue exceeding the existing distribution rate. This is up to 20 percentage points higher than the usual settlement amount paid to distributors.

Movie 'Sinkhole' Still Photos

From the perspective of film distributors, who handle tentpole films with relatively high production costs, this allows them to release films while minimizing box office risks. Both the theater and paid broadcasting industries expressed their intention to actively support marketing for Korean film releases through various methods beyond these support projects.

The background for this decision is the expectation that the release of major Korean films will increase audience visits to theaters and help normalize the film market. Although the theater industry provided an additional release support fund of 1,000 KRW per audience member from February to May, they failed to attract major Korean films to theaters. This is because the prolonged COVID-19 situation has increased the box office burden for high-budget films.

An official from the Korean Film Council stated, "The entire film industry agreed that the release of major Korean films that can attract audience interest is essential for the normalization of the film market," adding, "This decision is significant in that the theater industry, paid broadcasting industry, and distribution industry have come together voluntarily to revitalize the film market."

The theater and paid broadcasting industries jointly said, "Amid unprecedented difficulties faced by the film industry, we will make greater efforts, including this release support, to present better films to audiences," and "With the rapid distribution of vaccines, the number of Korean film releases, which had slowed down, is increasing, and we hope audiences will give even greater support and love."