After abandoning social distancing, movie theaters are facing an unexpected crisis. Unlike the speculation that the theater industry would recover at the end of the pandemic, movie seats remain empty. According to the Korean Film Council (KOFIC), the current number of moviegoers accounts for less than 50% of the total seats filled before social distancing. Therefore, the Sungkyun Times (SKT) aims to investigate the situation and analyze the causes of this issue.
The Empty Cinemas
-Moviegoers Not Returning
As time passes, the pandemic grows ever more dormant, and social distancing has come to a complete end. However, Korean theaters’ audience figures show little to no hint of retrieving their former glory. According to the 2022 announcement by the KOFIC, audience numbers grew to only 100 million, which is nearly half of the viewer count before social distancing. Consequently, the total revenue generated last year saw a 40% decline when compared to 2019. As these numbers illustrate, audiences have not appeared to recover in any significant manner, which is a critical phenomenon in the cinema industry. As the screens have endured a period of hardship during the coronavirus disease 2019 (COVID-19) era, there was always hope that things would go back to the pre-pandemic days. In such a state, the multiplexes of Korea are trying out a myriad of solutions to the matter, with all but no progress. One example was during a campaign last May, where movie tickets were marked down nationwide. Although the sales increased more than 30% from the previous month, they declined by 91.6% compared to May 2019. It further proves how the cinemas of Korea are going through a severe crisis.
-Stagnation in the Movie Industry
Due to the stagnation in the movie industry, cinemas in Korea have been dealing with a huge blow. Since most films produced within the country make low profits overseas, Korean movies strongly depend on domestic revenue. In fact, films from overseas only generate 5.6% of the total revenues, according to the KOFIC. Thereby, if domestic theaters fail to gather large enough audiences, movies fail to bring in profits. Conversely, cinema profits are also more directly affected by domestic films rather than imported pictures. According to research by Professor Choi Eun-yeong of Seoul Digital University, Korea’s unconventional distribution system and limited screen market are responsible for the reliance on the monetary profits from ticket sales. In this sense, the fact that the film Hero topped Korea’s box office record this year with a total viewer count of 3 million, demonstrates how problematic the situation is. In essence, the stagnation of movie theaters could lead to the downfall of the film industry, which continues to run in a vicious cycle of events.
Causes of the Empty Seats
-A Sharp Increase in Ticket Prices
One of the biggest factors in the reduction in movie audiences is the increase in ticket prices. While movie ticket costs have risen every two to three years in the past, during the pandemic, Korean multiplexes have sharply increased their ticket prices not once but three times from \12,000 to \15,000. Regarding this matter, the Korean Cinema Industry Association insisted that there was no alternative but to markup the prices due to the losses the pandemic caused and the rise in interest rates. Nonetheless, it is undeniable that such sharp price inclines are an economic burden to moviegoers. The multiplex corporations of Korea have driven off viewers by solely pursuing methods to benefit themselves. Moreover, Korea has shown a high increase rate in ticket prices when compared to other countries. According to research conducted by Omdia Cinema Admissions and Box Office in 2022, France showed a 4% increase, Japan showed an 8% increase in cinema tickets over the past four years, and Korea showed a 28.7% increase during the same period. This statistic clearly illustrates that Korea, while not particularly more affected by COVID-19 compared to the rest of the world, indicates a significant increase in movie ticket prices.
-A Fierce Competitor: OTT Platforms
Other than the increase in movie ticket prices, the shift in content consumption culture is contributing significantly to the recession of domestic cinemas. The emergence of Over-the-Top (OTT) platforms plays a huge role by allowing consumers to view various media content but at a fraction of the price for movie theaters. For example, Netflix enables people to watch thousands of films with only \10,000 per month. Kang So-ri (Freshman, Humanities) stated, “I find myself visiting the cinemas less than once per month after subscribing to OTT services like Netflix and Disney Plus.” To people living in the busy society of today, OTT services have become a satisfactory substitute for the big screens of cinema, more so due to the pandemic halting people from going to the theaters. Moreover, OTT services have attracted not only viewers but filmmakers as well. In Korea, every movie must pass a strict screening by the Korea Media Rating Board (KMRB) according to the Promotion of the Motion Pictures and Video Products Act. Therefore, directors and producers, who wish to escape from such rigid regulations after growing tired of the environment of the Korean movie industry, have moved to OTT platforms to express their creativity with more freedom.
How to Fill the Seats Once More
-Government Investment: The Key to Free Financial Burden
One solution to the theater crisis would be to increase government funding. For instance, theaters in the United States (U.S.) have succeeded in maintaining ticket prices after the act to support recovery from COVID-19 damages passed. The law allowed cinemas to stop raising ticket prices after a 17.5% increase from 2018 to 2022. In the past, the Korean government had also successfully supported cinemas. However, since the International Monetary Fund (IMF) crisis of 1998, the state passed a policy to encourage investments from the private sector by passing preferential loss provisions. As a result, the “Renaissance of Korean films” emerged around 2002 and 2003, creating masterpieces such as Old Boy and Memories of Murder, each generating revenue equivalent to billions of won today. In addition, corporate investments in the movie sector would also be of great help. In the 1990s, the Korean government promised to support but not interfere in the industry by encouraging venture capitalists to invest in the movie industry. Today, most movies are funded by hedge funds, banks, stock trade companies, or asset managers. Thereby, today’s movie theaters can be revived with the help of government funding.
-Cooperation, Not Competition
Over recent years, OTT platforms have taken place as an irreplaceable addition to the market, meaning cinemas should seek ways to cooperate rather than compete with them. Some theaters are already carrying out this vision. In April 2021, the Korean multiplex CGV collaborated with the OTT platform Watcha and opened a shared screening event called CGV Watcha Screens. This collaboration successfully gathered viewers by bringing movies that were only available on OTT platforms to the big screen. Similarly, Megabox, a Korean multiplex, announced its plans to display movies from OTT platforms, such as The Irishman and The Two Popes, after their premiere at the Busan International Film Festival in 2019. Furthermore, cinemas should increase the quality of their viewing experience. As the primary reason people visit the theaters is to experience something that cannot be fulfilled in daily life, enhancing the quality of screens or providing a wider variety of theaters would be a step in the right direction. In this way, providing a better viewing environment would result in the return of viewers to the theaters. As such, cinemas should find a way to cooperate with OTT platforms, thereby pursuing coexistence rather than trying to go back to the virtual monopoly they once were.
Through the years, movie theaters were not just a place to watch the latest movies. They were also a space for people to build precious memories with their loved ones. Hence, it would be a great loss if the next generation could not have such meaningful experiences, especially if natural disasters like the pandemic were not the cause, but the ignorance of our society. Therefore, the maintenance of cinemas is essential, not just for the whole industry but in terms of public welfare also.