"No More Room to Retreat" The Dangerous Survival Strategy of Movie Theaters

CGV, Lotte Cinema, and Megabox Need Over 13 Million Monthly Visitors to Avoid Deficit
No Government Support, No Release News; Up to 50% of Production Costs to Be Allocated to Two Films
Unprecedented Incentives... Industry Calls It "Overreach," No Hope for 6000 Won Discount Coupons

On the 11th, one day before the implementation of Level 4 social distancing in the Seoul metropolitan area, a movie theater in downtown Seoul is quiet. Photo by Mun Ho-nam munonam@

The peak season for movie theaters is July to August. Last year, 14,453,442 viewers visited, the highest since the spread of COVID-19. However, they failed to turn a profit. The three multiplex chains (CGV, Lotte Cinema, Megabox) need over 13 million viewers per month to avoid losses. Before the COVID-19 outbreak, this was easy. In July and August of 2018 and 2019, the number of viewers was 50,034,944 and 46,702,586 respectively?more than three times last year’s figures.

The three multiplex chains are struggling with debt amid prolonged operational difficulties. A rebound this summer is crucial. Therefore, they have introduced an unprecedented incentive. They are prioritizing director Ryu Seung-wan’s “Mogadishu” and director Kim Ji-hoon’s “Sinkhole.” Until 50% of the production costs (including promotional marketing expenses) are recovered, all revenue will be allocated to the distributors and producers. After that, the revenue-sharing ratio will return to the usual 50:50 split. Once the break-even point is surpassed, theaters will take a slightly larger share.

To reach 50% of sales, “Mogadishu” and “Sinkhole” need to attract approximately 2 million and 1.25 million viewers respectively. The three multiplex chains were confident at the time of the announcement. However, the situation changed when the daily COVID-19 cases reached the 1,000 range (1,212 cases) on the 7th. With the implementation of Level 4 social distancing in the metropolitan area, anxiety is mounting.

On the 11th, one day before the implementation of Level 4 social distancing in the Seoul metropolitan area, a movie theater in downtown Seoul is quiet. Photo by Mun Ho-nam munonam@

More than half of movie theater sales occur in the metropolitan area. Starting this week, operating hours are limited to 10 p.m. During the evening peak hours, this effectively allows only one screening per screen. Private gatherings are also limited to two people from 6 p.m. Multiplex representatives unanimously said, “Overall sales are expected to decrease by about 20%.”

With additional measures such as leaving one seat empty and banning food consumption, will the multiplex chains’ incentives work? Marvel Studios’ “Black Widow,” released on the 7th, attracted 1,366,054 viewers in its first five days, the highest performance among this year’s releases. Although sales have slightly slowed since the operating hour restrictions began on the 12th, surpassing 2 million viewers this weekend is expected. If “Mogadishu” performs similarly, the multiplex chains can expect profits starting ten days later. For “Sinkhole,” this would be five days later.

The atmosphere on site is not welcoming. The manager of multiplex company A said, “It’s a reckless move considering the Tokyo Olympics are also taking place,” and expressed concern, “If ‘Mogadishu’ fails at the box office, we won’t earn a single penny.” Another manager at the same theater complained, “‘Mogadishu’ is a Lotte Cultureworks production, so working for a competitor, Lotte Cinema, until it reaches 50% of sales is like working for the competition.”

At multiplex company B, they said, “There has never been a time when theaters have bowed down this much after struggling with distributors,” adding, “The ecosystem has collapsed to the point where the survival of theaters depends on specific films.”

On the 11th, one day before the implementation of Level 4 social distancing in the Seoul metropolitan area, a movie theater in downtown Seoul is quiet. Photo by Mun Ho-nam munonam@

Head office officials say this is a survival strategy devised due to the lack of government support and the absence of Korean film releases. In reality, the harsh conditions have not improved at all. Although the amendment to the “Act on the Promotion of Movies and Videos,” which adds “revenue decline due to infectious disease outbreaks” as an exemption for the film development fund collected by the Korean Film Council, passed the National Assembly plenary session on the 30th of last month, it will take effect in September. Previously, the three multiplex chains demanded a full exemption from the film development fund this year.

Before last summer’s peak season, the government distributed 1.33 million discount coupons worth 6,000 won each. Thanks to this, movie theater attendance rebounded to 5,618,701 in July and 8,834,741 in August. Discount coupons are prepared again this time, but there is one condition: a vaccination rate of over 50%. It seems unlikely they will be used during the peak season.