[Focus]② Will 200 Million Moviegoers Return to Theaters if Ticket Prices Drop?

Is It Possible to Reduce Movie Ticket Prices and Regulate OTT Holdback?
Three Films Including 'Rebound' to Release in April...The Final Showdown
Industry Perspectives on Solutions to the 'Cinema and Korean Film Crisis'?

[Focus]① Is the Problem the Theaters or the Crisis of Korean Cinema? Continued from the previous article.

When did it start? The time when, after a press screening of an upcoming film, reporters would ask each other, "How did you find it?" When was the last time in the past year that anyone felt excitement and joy as the scroll ended after a screening? In the past, there were quite a few times when I watched a great movie and wanted to quickly share my impressions in an article. Writing reviews after watching movies used to be quite doable, but now it has become difficult. The number of films watched but not reviewed has also increased. This is a conversation among several film journalists recently. Many concerns cross their minds.

Why? What is the problem? It was not convincing to simply dismiss it as a market change. How can the film industry and theaters be revived? We needed to hear voices from the field. We summarized industry issues and listened to opinions.

[Photo by Yonhap News]

"Weekend Theater Ticket Price 15,000 Won... Admission Fee is Expensive"

The three major domestic multiplex chains (CGV, Lotte Cinema, Megabox) have raised theater ticket prices three times since the COVID-19 pandemic. Currently, weekday tickets cost 14,000 won, and on weekends including Fridays, 15,000 won must be paid. This is a 4,000 won increase compared to before the pandemic.

The rise in movie ticket prices has become a key issue. Some argue that the high admission fee is the cause of the recent crisis in the film market and insist it should be lowered again. This is because the monthly subscription fee for online streaming services (OTT) is comparable to the price of watching one movie. Audiences inevitably compare these two values. Some in the industry argue that ticket prices should be lowered to reduce the barrier for audiences to enter theaters.

Audiences met at theaters agreed that movie ticket prices are burdensome. Lee Jun-hyung (28, male), whom we met recently at CGV Yongsan I'Park Mall in Yongsan-gu, Seoul, said, "If I want to watch a movie with my girlfriend on the weekend, the ticket alone costs 30,000 won, and eating, drinking tea, and popcorn cost over 100,000 won. Although there are discounts from telecom companies or credit cards, these were used even before the ticket price increase, so they don't really help. Now going to the theater feels burdensome."

Park Joo-yeon (30, female) said, "I usually watch movies on weekends, but the 15,000 won ticket price is a burden. In the past, if a movie was not fun, I wouldn't mind much, but now I think about getting my money's worth and sometimes regret not just watching OTT at home. Also, since theater prices are comparable to a monthly OTT subscription fee, I can't help but compare."

The industry is well aware of this atmosphere. An official from an investment-distribution company, Mr. A, sighed, saying, "Audiences these days are cold." He continued, "Over the past three years, audiences have watched high-quality content at home via OTT, raising their expectations. The way of watching movies has changed as they have experienced very enjoyable movies without going to theaters."

Photo by Jinhyung Kang aymsdream@

Director Choi Dong-hoon (53) publicly expressed the opinion that movie ticket prices should be lowered. At the Directors Chair event held on the 21st of last month, Director Choi said, "Some say that the emergence of OTT has reduced theater audiences, but I don't think so." He added, "The competitors for theaters are OTT as well as other cultural activities. Perhaps people are now seeking the cultural richness they used to feel in theaters elsewhere."

"I think theater ticket prices should be lowered. In China, after the COVID-19 pandemic, ticket prices were lowered by about 500 won. That is a very important signal. It's like saying, 'Everyone, it has been tough until now, but we have lowered prices, so please come watch movies.' Don't we need such a sign too? Shouldn't we think and make efforts regarding theater issues?" (Choi Dong-hoon)

Possibility of Lowering Theater Ticket Prices?

Photo by Mun Ho-nam munonam@

Is it possible to lower movie ticket prices once they have been raised? Theaters say that prices were bound to rise eventually, and raising ticket prices lowers the break-even point (BEP), so they have no reason to oppose it.

Kim Jin-sun (51), president of the Korea Film Council, questioned, "If ticket prices go down, will audiences be satisfied and increase?" He added, "Investment-distribution companies and production companies also agreed to the price increase. The industry consensus is that fair ticket prices should be charged." He continued, "We have a mission to produce quality films and repay with good theater content. We don't want to sell cultural products at low prices with high volume." He also said, "Theaters should invest tens of billions in special theaters to provide new experiences for audiences."

President Kim said, "I understand the opinion that three price increases within three years after the pandemic feel sudden." Are current theater prices appropriate? He said, "They are the cost of making such content and creating spaces to showcase it. I don't think it's expensive. Production companies also actively supported the increase. In that sense, it's a reasonable price to make good content." He explained, "Domestic theaters operate at a loss if annual audience numbers do not reach 150 million due to labor costs, gas and electricity bills, rent, and other operating expenses. Production costs have also risen as the film production environment has changed."

"Theaters are dying. Will audiences flock just because prices are lowered unconditionally? Could this be solved by setting different ticket prices by time slots and audience segments? Also, theaters have various events and discount benefits. Developing these as marketing strategies to return value to customers and continuously communicating to attract audiences to theaters is important."

The American multiplex chain AMC is implementing a policy of varying ticket prices by seat location during evening hours. Front seats are priced 1 to 2 dollars (about 1,300 to 2,600 won) cheaper, while middle seats are priced higher. They are also expanding differential pricing policies, such as charging higher prices for blockbuster premieres on opening weekends.

Waiting for OTT? Is Holdback Regulation Possible?

[Photo by Pixabay]

"I hardly watched any movies in theaters last year. Anyway, if I wait a little, it will be available on OTT. Now I think I don't have to go to theaters and just wait to watch on OTT."

Heo Mi-dam (27, female), whom we met at a location in Seoul, cited OTT as the reason for not watching movies in theaters last year. The 10-20 age group has a low perception that "movies must be watched in theaters." It is analyzed that after the COVID-19 pandemic, they experienced enjoying high-quality content comfortably at home. With just a smartphone, laptop, or smart TV, they can watch comfortably at home, and buses and subways also become theaters.

An official from an investment-distribution company, Mr. B, said, "Previously, we coordinated release schedules to avoid overlapping with other distributors' films, but now we have to consider OTT's main content release schedules. For so-called blockbuster content, the focus of interest has shifted, causing damage. If interest is concentrated on OTT and dramas, it is difficult to disperse to theaters."

The shortened 'holdback' period?the time between theatrical release and video release?is also cited as a cause. The films "Emergency Declaration" and "Hansan: Rising Dragon," released last year, were made available on Coupang Play just four weeks after ending theatrical runs.

Film industry insider Mr. C said, "For major releases, negotiations with OTT platforms about release timing are held before the premiere. The release date after the premiere is set, which helps lower the break-even point (BEP). This is a new marketing method after the pandemic."

France shortened the SVOD (subscription video on demand) holdback period from 36 months to 15 months last January through negotiations with OTT platforms. This was conditional on OTT investing about 4 million euros (about 56 billion 576 million won) annually to produce more than 10 local films. Netflix agreed, but Disney+ did not.

President Kim Jin-sun said, "Like France, a mandatory 3% levy should be collected and returned as a fund for the domestic film industry. Also, legal amendments are needed to allow OTT releases about one year after theatrical release, like in France." He added, "Saving Korean cinema is the priority. Since films appear on OTT and IPTV after 8 weeks, audiences wait for that and do not come to theaters."

"Because of OTTs like Netflix, Korean films are dying. Ironically, the government provides a lot of subsidies and even allows OTT to conduct their own censorship. Efforts to restore holdback periods or delay contracts with distributors are also necessary." (President Kim)

"Film is an Industry, Government Support Needed" Opinions

[Photo by Yonhap News]

The Korea Film Council urged government intervention. The Mother Fund is public capital created by investing budgets from the Ministry of Culture, Sports and Tourism and the Korean Film Council. The government invests in venture capital to nurture small and venture companies. On the 7th, the Ministry of SMEs and Startups announced through the 'Mother Fund 2023 2nd Regular Investment Announcement' that it will invest 684.5 billion won from eight ministries. The Ministry of Culture, Sports and Tourism will invest 67.5 billion won to create a 40 billion won investment fund for low- and mid-budget Korean films (with the Korean Film Council's Film Development Fund contributing). The Korea Venture Investment, the operating agency, prohibits Mother Fund investments in films involving large corporate-affiliated investment-distribution companies.

President Kim Jin-sun said, "The size of the Mother Fund has decreased. The proportion of film investments that do not generate returns inevitably decreases." He added, "Major domestic theaters are suffering astronomical operating losses. It may take about 10 years to recover. Theaters' credit ratings have dropped, so they cannot get loans. Considering this, please temporarily lift restrictions on large corporate investments in the fund or open policies to allow the fund to be used as policy funds with repayment."

President Kim also urged, "Even temporarily, please recognize Korean films as art under tax law to receive value-added tax (VAT) exemption benefits." The scope of artistic creations exempt from VAT includes creative works such as art, music, photography, non-profit arts and cultural events, and amateur sports. Since 2015, tax law amendments have recognized musicals and plays as art, granting VAT exemption benefits. The president said, "If Korean films are also recognized as artistic creations and given a 10% exemption, it would help revive the stagnant market."

April to June: Korean Cinema's 'Last Battle'

The spark is faint but still alive. Japanese animations like "The First Slam Dunk" and "Suzume's Locking Up the Door" have attracted audiences through word of mouth, keeping the spark alive. Now the film industry's challenge is how to keep it burning brightly without extinguishing it.

The industry agrees that April to June is a crucial period. In May last year, "The Outlaws 2" attracted 10 million viewers, and in June, "Top Gun: Maverick" helped boost the momentum. If the films releasing consecutively next month?"Rebound" (director Jang Hang-jun), "Killing Romance" (director Lee Won-seok), and "Dream" (director Lee Byung-hun)?perform well, there is hope that Korean cinema will revive. In May, Hollywood films "Guardians of the Galaxy Vol. 3," "The Little Mermaid," and "Fast & Furious: Ride or Die" will be released. The industry is closely watching whether this momentum will continue into the summer market from June to August.

[Photo by Yonhap News]

A film industry insider, Mr. D, said, "It is important how the films released in April are received. We must firmly hold onto theater audiences so they never again compare OTT subscription fees with movie ticket prices. Ultimately, filmmakers involved in the business must actively find ways and regain lost audience trust; otherwise, the current stagnation cannot be changed. If money continues to flow into OTT content production as it is now, film investment will inevitably become difficult."

A senior official from an investment-distribution company, Mr. E, said, "The film industry must unite with a desperate spirit. The current situation cannot be changed by efforts in just one sector." He emphasized, "Complex problems are interlocked like gears. Understanding this and uniting theaters, distribution, and production to make all-out efforts is necessary. We must make multifaceted efforts to bring audiences back to theaters. We must work together with the urgent mindset that this year is the 'last chance.'"

A production company CEO, Mr. F, said, "Audiences and viewers are smart. Whether theater or OTT content, it becomes clear within half a day whether it is fun or not. Before ticket price increases, if a movie was not fun, people would say 'Let's watch a better movie next time,' but now it's different. Social media is filled with blunt reviews. Ticket prices are no longer the same, and a culture of actively sharing personal critiques has formed. Good movies spread by word of mouth, and bad movies spread bad rumors," he analyzed.

He continued, "Bookstores sought solutions amid changes in online and offline markets. Theaters and the film industry might also accept these changes as an inevitable natural flow. The film industry must quickly find ways to coexist with theaters and OTT. The most important thing is awareness and effort to create quality, entertaining films. There is hope if a 'blockbuster' content emerges. Situations can always change. The important thing is an unyielding spirit."