[Inside Chodong] Theater Normalization: One Hurdle After Another

The "Holdback" Period Between Theaters and OTT/IPTV Disappears
No Legal Measures in Korea for Simultaneous Releases
Three Major Multiplex Chains Appeal for COVID-19 Relief
Need to Consider an Environment for Coexistence Between Theaters and OTT Platforms

On the 12th, a movie theater in downtown Seoul was quiet. According to the Korea Film Council's integrated ticketing system, the number of moviegoers who visited theaters the previous day was 10,776. This is the lowest figure since the council began official statistics in 2004. Photo by Mun Ho-nam munonam@

CJ ENM will simultaneously release the movie Seobok on the online video service (OTT) TVING and in theaters on the 15th of next month. This was unthinkable just a year ago. There used to be a fixed "holdback" period (the time it takes for content ancillary rights to transfer from one platform to another) between theaters and OTT/IPTV.

In 2017, Netflix released director Bong Joon-ho's Okja without any holdback, sacrificing screens from the three multiplex chains (CJ CGV, Lotte Cinema, Megabox). At the time, the multiplexes collectively stated, "Theatrical films are typically released in theaters first and then made available on internet TV and other platforms 2-3 weeks later," adding, "Netflix is ignoring the ecosystem of the film industry to lure customers to its own platform."

The theatrical screening of Okja was also a hot topic at the Cannes Film Festival. Although it was invited to the competition section, it faced backlash from the French Cinema Association and others. France legally mandates that streaming services can only be offered three years after a film's theatrical release. The French Cinema Association demanded that the film be screened throughout the country based on this regulation.

There are no legal measures regarding holdback periods in Korea. Only recommendations exist to stagger releases before online services. The theaters lost the justification to legislate this after allowing the simultaneous OTT release of Seobok. They themselves broke the convention of exclusive theatrical releases to quickly respond to the urgent situation caused by COVID-19.

The situation could change once the COVID-19 crisis improves. However, coexistence with OTT is inevitable. Since OTT platforms or their affiliates hold film rights, a disadvantageous battle for theaters is expected. In fact, Warner Bros. is simultaneously releasing seventeen distributed films this year in theaters and on its own OTT, HBO Max. Previously, streaming services were only allowed after about 90 days of theatrical release.

AMC, the largest movie theater chain in the U.S., saw its stock price plunge by 16% amid this unstoppable change. This news came after Universal Studios shortened the exclusive theatrical window from 90 days to 17 days, sparking crisis talks.

The dire situation is no different for domestic theaters. Although they did not close like in the U.S., last year’s audience count was under 60 million?the lowest since the integrated ticketing system began in 2004. The government and the Korean Film Council’s relief measures were limited to a 90% reduction in the film development fund levy and 800 million KRW support for quarantine costs. Requests for rent support, which had been consistently appealed for, were rejected due to the theaters being affiliated with large corporations. Ultimately, ticket prices were raised in October last year, only increasing consumer dissatisfaction. The price for a single movie ticket is comparable to a one-month subscription to an OTT service.

On the 3rd, representatives of the three multiplex chains met with Minister of Culture, Sports and Tourism Hwang Hee to request solutions for the shortage of new releases. They argued that if anticipated films were released, the damage caused by COVID-19 could be minimized. The Ministry of Culture, Sports and Tourism and the Korean Film Council are working together to devise a plan. A source said, "The general consensus is that the effect of distributing 1.33 million 6,000 KRW discount coupons last year was not significant," adding, "We are considering new methods."

Discussions should not focus solely on recovery from COVID-19. The coexistence environment between theaters and OTT must also be considered. A clear definition of OTT films should be established, and an environment that encourages fair competition must be created. This also requires effort from theaters. It is fundamental to prove that the same film can offer a different experience. Theaters must enhance qualitative differences and secure price competitiveness to develop beyond just being a distribution intermediary space. Just as the crisis caused by the spread of TV was overcome with cinema complexes and blockbusters in the past...

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