Movie Theaters Struggling Amid COVID-19 and OTT Competition

Expecting a Turning Point with Hollywood-Produced Blockbusters

On the 18th, CGV Yongsan I'Park Mall in Seoul was less crowded than usual. On this day, CGV announced that it will raise movie ticket prices by 1,000 won starting from the 2nd of next month to overcome the crisis caused by the prolonged COVID-19 situation. Photo by Moon Honam munonam@

[Asia Economy Reporter Gong Byung-sun] The recovery of the cinema industry, which was shaken by COVID-19, is still slow. While the cinema industry has been faltering, a new competitor called Over-The-Top (OTT) services has emerged. However, Hollywood blockbusters scheduled for release in the second half of the year are expected to be a turning point.

According to the Korea Exchange on the 5th, CJ CGV closed at 27,250 KRW on the 2nd, down 1.27% (350 KRW) from the previous trading day. It fell for two consecutive days following the 1st. Jay Contentree, which operates Megabox, and Lotte Shopping, which holds shares in Lotte Cinema, also declined for two consecutive days.

As COVID-19 remains uncontrolled, recent box office performance has been lackluster. In March, the number of moviegoers was 3.26 million, a 78% increase compared to the same period last year, but the cumulative number of viewers was 8.15 million, down 67% from the same period last year, still showing negative growth. In fact, the total number of viewers for this year’s first-quarter top hits, "Soul," "Demon Slayer: Mugen Train," and "Minari," was about 4.5 million, which is less than last year’s first-quarter hit "The Man Standing Next" (about 4.75 million).

Expectations for economic recovery are also bypassing the cinema industry. According to the Korea Chamber of Commerce and Industry, the Manufacturing Business Survey Index (BSI) for the second quarter was 99, the highest in 27 quarters. The KOSPI manufacturing index also rose 2.69% compared to a month ago. On the other hand, CJ CGV fell 2.68% during the same period. Jay Contentree and Lotte Shopping showed an upward trend but compensated through content, department stores, and other sectors excluding cinemas.

After COVID-19, competition with OTT services is inevitable. Among overseas OTTs, Netflix has rapidly grown, reaching about 10.01 million monthly subscribers as of February. Disney recently announced its entry into the domestic OTT market in the second half of the year by excluding its content from local OTT platforms. Domestic OTTs have also decided to increase their investment to secure content. Wavve plans to invest 1 trillion KRW, CJ ENM, which operates TVING, will invest 400 billion KRW, and Watcha raised 36 billion KRW in investment last December.

However, there are also views that recovery can begin with the release of Hollywood blockbusters in the second half of the year. Hyunji Lee, a researcher at Eugene Investment & Securities, said, "In the case of blockbuster movies, audiences prefer to watch them in theaters rather than on OTT platforms," adding, "With blockbuster releases delayed for nearly a year, if they are released consecutively from the second half of the year, the cinema industry is expected to recover this year."

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