"COVID-19-Induced Economic Recession, Movie Theater Sales Decrease by Up to 73%"

Korean Film Council 'COVID-19 Impact: Current Status and Prospects of the Korean Film Industry' Report
"Up to 25,429 Direct and Indirect Employees in Film and Related Industries at Risk of Job Insecurity"

On the 8th, the third day since the transition to daily quarantine, a movie theater in Gangnam-gu, Seoul, is quiet. Photo by Mun Ho-nam munonam@

This year, movie theater revenues are expected to decrease by approximately 1.4 trillion KRW compared to last year due to the impact of the novel coronavirus disease (COVID-19). According to the report "COVID-19 Shock: Current Status and Outlook of the Korean Film Industry," released by the Korean Film Council on the 8th, the film industry could face employment insecurity for more than 20,000 people due to a sharp decline in revenues this year.

The main basis for this is the results of a previous survey conducted by the Korean Film Council and the prolonged COVID-19 situation. The 82 films that responded to the survey suffered damages amounting to 21.38993 billion KRW from January to April. The average damage per film was 263.89 million KRW. Among the staff whose employment was postponed or canceled at these filming sites, there were 413 people. The decline in movie theater revenues is even more severe. The number of visitors to theaters last month was 972,576, which is only 7.3% of the 13,338,963 visitors during the same period last year.

The difficult situation continues this month as well. The policy research team stated, "It will take at least one year or more to develop and distribute a COVID-19 vaccine," and added, "It is unlikely that the epidemic will subside rapidly or that the economy will follow a sharp recovery curve."

On the 8th, the third day since the transition to daily quarantine, a movie theater in Gangnam-gu, Seoul, is quiet. Photo by Mun Ho-nam munonam@

The policy research team presented two scenarios for the recovery of theater attendance. The first is an optimistic assumption that the number of visitors will steadily increase from this month through December. If the number of visitors increases by 10% each month compared to the same month last year, it is expected to recover to 80% of last year's level by December. Applying the least squares method to derive a trend function (4th-degree polynomial), this year's theater revenue is estimated to be 727.3 billion KRW, which is 1.1866 trillion KRW (62%) less than last year.

The second is a pessimistic assumption that COVID-19 will spread again before December or that the domestic economy will lose resilience due to an overseas economic downturn. If recovery occurs at about 5% each month compared to the same month last year, it is expected to recover to half of last year's level by December. In this case, this year's theater revenue is estimated at 516.7 billion KRW, which is 1.3972 trillion KRW (73%) less than last year.

The policy research team explained, "Typically, ticket sales revenue is divided with theaters taking 43.5%, and investors, distributors, and producers taking 33.5%." Applying this revenue-sharing structure to the two scenarios, theater profits are expected to decrease by 517.2 billion to 607.8 billion KRW compared to last year. They added, "The investment, distribution, and production sectors could experience a revenue decline of 397.5 billion to 468 billion KRW compared to last year."

On the 8th, the third day since the transition to daily quarantine, a movie theater in Gangnam-gu, Seoul, is quiet. Photo by Mun Ho-nam munonam@

The negative view on employment insecurity is based on theater revenue forecasts and the employment inducement coefficient. The employment inducement coefficient refers to the total number of jobs created when demand such as consumption, investment, and government spending increases by 1 billion KRW. It includes both directly employed workers and those indirectly employed in other sectors. Based on the 2010 Bank of Korea input-output table and calculated in 2015, the employment inducement coefficient for the film industry is 18.2. This means that when theater revenue increases by 1 billion KRW, the number of direct and indirect employees in the film and related industries increases by 18.2.

The policy research team cited the size of the Korean film industry workforce in 2018 as an example, explaining that estimating employment using the employment inducement coefficient is meaningful. "In 2018, the Korean film industry workforce, including digital online distribution and others, was 30,878. Dividing the theater revenue of 1.914 trillion KRW in the following year by 1 billion KRW and multiplying by 18.2 theoretically estimates the number of direct and indirect employees in the film and related industries at 34,835."

Applying the employment inducement coefficient to the revenue decline estimated under the pessimistic assumption, up to 25,429 direct and indirect employees in the film and related industries could face employment insecurity this year. Even applying the revenue decline estimated under the optimistic scenario, the number reaches 21,596.

This trend could continue into next year. The policy research team stated, "Typically, it takes about two years from production to release of a film, so even if the COVID-19 situation stabilizes, releases will be affected for a considerable period." They added, "About half of the films screened in theaters are foreign films centered on the United States," and "Since all Hollywood production companies halted production from March, the impact of COVID-19 could continue for at least two years even if the domestic situation stabilizes."

This content was produced with the assistance of AI translation services.