[Focus] ① Is the Problem the Theater or the Crisis of Korean Cinema?

Audience Halved... The Era of 200 Million Ends
Rise of OTT, Increase in Theater Ticket Prices
What Is the Problem in the Crisis-Stricken Film Market?

"I sincerely want to ask the audience. What would make you return to the theater?"

A seasoned filmmaker recently lamented the ups and downs caused by the decline in theater audiences and the contraction of investment in Korean films, expressing this sentiment. It is a courageous confession and a desperate plea.

Since the COVID-19 pandemic, audiences have changed. They only visit theaters if the movie is so entertaining that word of mouth spreads widely or if there is a compelling 'reason' to watch it. This is because they have had sufficiently enjoyable experiences at home. Alternative platforms abound. Theatrical films are in crisis. The younger generation tends to wait until films are released on Over-The-Top (OTT) streaming services. There are various reasons for this: rising movie ticket prices, expansion of OTT platforms, and increased expectations due to the growing quality of content.

What is currently happening in theaters and the film industry? Asia Economy listened to the voices of many filmmakers, including theater, production, and distribution officials, actors, and audiences who visited theaters. The industry unanimously agreed that "the theatrical film market is in a serious state."

[Photo by Yonhap News]

Last year's theater situation was severe. Except for 'The Outlaws 2,' which was released in May and attracted 12.69 million viewers, and 'Hansan: Rising Dragon,' released at the end of July with 7.26 million viewers, no Korean film achieved notable success. 'Owl,' released in November, drew 3.32 million viewers, surpassing its break-even point of 2.1 million, but it is hard to call it a hit. The atmosphere is such that surpassing 3 million cumulative viewers, let alone 1 million, has become difficult.

According to the Korea Film Council's integrated ticketing system (KOBIS), 1,774 films were released in 2022, with 2,823 screenings. The total number of theatergoers last year was 112,805,053, about half of the 226,678,777 in 2019 before the COVID-19 pandemic. Annual revenue was 1,160.2 billion KRW, down approximately 750 billion KRW from 1,913.9 billion KRW in 2019.

Will the audience who left the theaters return?

Since January 2020, when COVID-19 emerged, theaters were empty as everyone refrained from going out due to the severe infectious disease. In movie theaters, which are multi-use facilities, masks had to be worn and seats spaced apart. As audience visits stopped, theaters suffered astronomical losses. Major conglomerates operating multiplexes in Korea struggled to the point of staggering. Some signs of attempts to exit the theater business were detected.

The industry believed that audiences would return once the virus disappeared. When 'The Outlaws 2' surpassed 10 million viewers in May last year, it was believed that suppressed demand for movie-going exploded and audiences returned. Following the success of 'The Outlaws 2,' 'Top Gun: Maverick' also succeeded, and the film industry was excited, believing theaters had revived. However, several films with production costs in the hundreds of billions of won released that summer suffered near-disastrous failures. Audiences were greatly disappointed in Korean films. Those who left did not return. The industry was shocked. Many insiders sighed recalling that time.

The image is unrelated to the content. [Photo by Yonhap News]

"Evaluating films is a subjective judgment based on audience preferences, so it's not something the industry should debate, but the shock theaters received then was huge. Both the industry and audience had high expectations. We hoped the momentum would continue if the peak season was well supported, but it was cut off. Ultimately, the answer lies in fun and good films that do not simply follow existing formulas. Even if it takes time, films with new themes and formats need to be released in theaters."

(Theater official A)

"We expected audiences to return to pre-pandemic levels once the pandemic ended, but that was not the case. Watching movies in theaters became unfamiliar, and filmmakers developed a fear that audiences might never return. We sense that consumption patterns are unusual. People have experienced watching films through OTT, and rising theater ticket prices have become a burden. The market has become accustomed to not going to theaters. How long will this atmosphere last? I wonder if things will really improve after this year or next."

(Film producer B)

The era of 200 million viewers ends... Investment in theatrical films also 'plummets'

Last year's audience count was 112,805,053. The era of 200 million annual viewers has effectively ended. The prevailing expectation is that it will not return. As audiences decline, investment has also contracted.

Money flows to places with high returns. In that sense, films were a good investment. At least in the past, that was true. Most traditional film investors have left because there is no reason to stay in a market that does not generate profits. The current state of the film industry is more serious than expected.

"The five major investment-distribution companies of large corporations account for 20-30% of investments, while partial investors make up 70-80%. Over the past three years, as box office profits failed to materialize, most have exited the film market. Partial investors, who have saved the film industry for the majority of the time, have left. No company takes on 'High Risk High Return' investments anymore. Moreover, the global economic market is poor, which has also contributed to the contraction of investment. With total theater audiences decreasing, how can the industry survive?"

(Film producer B)

"It is impossible to produce small and medium-sized films. In the past, it was possible to invest 5 to 6 billion KRW to make a film, but now that is no longer feasible. It is difficult to cover production costs, and special effects or 3D cannot be created. The competitiveness of content ultimately lies in its theme, but technically advanced experiential films cannot be produced."

(Film industry official C)

The worst theater market in January-February... Korean films lose trust

The atmosphere in January and February was worse than in January and February 2020, when COVID-19 first emerged. In January 2020, when the first domestic COVID-19 case was confirmed, 24,216,065 people visited theaters, and in February, 4,898,037, totaling 24,216,065 visitors. This year, there were fewer audiences than then. In January, 11,250,361 viewers and in February, 6,421,297 viewers visited theaters, totaling 17,671,658. Film industry official D said, "Three years ago in January, when the first confirmed case appeared in theaters, audience visits dropped sharply in January and February that year. This year, January and February audiences decreased compared to then. The industry feels not just a sense of crisis but fear."

Korean films have lost face. Most of the audience in January and February this year was drawn by the popularity of Japanese animation. The Japanese animated film 'The First Slam Dunk,' released on January 4, stirred nostalgia among viewers in their 30s and 40s, attracting 4,192,180 cumulative viewers by the 23rd, creating a sensation. 'Suzume no Tojimari,' directed by Makoto Shinkai and released on the 8th, attracted 2,207,368 viewers and gained popularity. 'Demon Slayer: Kimetsu no Yaiba ? To the Swordsmith Village,' released on the 2nd, drew 507,505 viewers, and the concert film 'I'm Hero The Final' featuring singer Lim Young-woong, released on the 1st, attracted 218,529 viewers, which was also notable.

It was necessary to hear the audience's voice. On the 23rd, at Megabox COEX in Samseong-dong, Gangnam-gu, Seoul, audience member Kim Jae-hoon (31, male) said, "I came to see 'Suzume no Tojimari.'" He added, "Before the pandemic, I went to the theater about once a month, but last year I only saw two Korean films in theaters." When asked why, he gave a firm answer.

"If there are good films, I don't see why I wouldn't go to the theater. I think it's wrong to say there are no audiences in theaters vaguely. I watched both 'Avatar 2' and 'The First Slam Dunk' twice in theaters. 'The Outlaws 2' was also fun. But among the Korean films I saw last year, one I expected to enjoy was not fun. After that, I thought I might as well just watch Korean films on OTT at home."

(Audience)

[Photo by Yonhap News]

The audience was cold. The reactions of many viewers, including Mr. Kim, were similar. A senior official from a distribution company, who requested anonymity, analyzed, "Korean films have lost trust." He continued, "Key players who are dormant and good films need to be released in theaters. The problem is the practice of selling good films to OTT just to break even. For the greater good, films that can attract many viewers should be screened in theaters. Long-term beneficial measures need to be sought, and decisive action is necessary."

Veteran actor Choi Min-sik (60) shared the same opinion. He emphasized, "The world has changed. As people could not gather, platforms naturally changed. We have no choice but to accept this, but we need to find ways to coexist with OTT."

"Theater must not disappear. It is a place where many people experience joy, anger, sorrow, and pleasure. Whether big or small, it must exist. It is not a place to be put in a museum. From a business perspective, more research is needed, but creators should make good content. The priority is to make it well so many people can watch it."

(Choi Min-sik)

Editor's Note'[Focus]② Will lowering movie ticket prices and delaying OTT releases bring audiences back?' Continued in the March 26th report. The follow-up article will gather various industry opinions on reducing theater ticket prices, regulating OTT holdbacks, and urging government support, and seek practical solutions.