[Special Interview] If Theaters Die, Movies Die Too

COVID-19 Era, 7-Person Roundtable on Film Industry Recovery
Film Industry Scale Halved in 2 Years... Government Support Focused on Discount Vouchers
Foreign Films Benefit More Than Korean Films... Film Development Fund Burden, Temporary Suspension Needed
Government Support Focused on OTT Also Problematic... The Core of Korean Film Industry Is Theatrical Releases
Expanding Film to Comprehensive Video Industry Core... Requires Government-Level Consideration Beyond Korean Film Council

Government officials and film industry representatives attending a discussion on the film industry held at CGV Yongsan in Seoul on the 10th are exchanging opinions. Photo by Jinhyung Kang aymsdream@

According to the '2021 Korean Film Industry Report' released by the Korean Film Council on the 22nd, the domestic film industry market size last year was 1.0239 trillion won. This represents a contraction to 40.8% of the 2.5093 trillion won scale in 2019. Total box office revenue was 384.5 billion won, only 30.5% of the 2019 figure. Although it increased by 14.5% compared to the previous year, it stood in stark contrast to countries like China, the United States, and the United Kingdom, where box office revenue rose by more than 90%.

The slow recovery is attributed to the postponement of the release of anticipated Korean films. Korean films have led foreign films in audience share for ten consecutive years since 2011. However, last year, this share plummeted to 30.1%. The proportion of box office revenue accounted for by Korean films was only 29.7%. There were seventeen commercial films with a production budget of over 3 billion won released last year, a significant 58.6% decrease from 29 films the previous year.

The government plans to invest 8.2 billion won next month to promote the release of new Korean films. At the time of establishing detailed measures, Asia Economy organized a forum to discuss effective support policies. Together with Kim Jae-hyun, Director of the Content Policy Bureau at the Ministry of Culture, Sports and Tourism; Park Ki-yong, Chairman of the Korean Film Council; Jo Sung-jin, Head of Strategic Support at CJ CGV; Kim Moo-sung, Executive Director of Marketing at Lotte Cultureworks; Kim Jae-min, CEO of New Film Business Division; Jang Won-seok, CEO of BA Entertainment; and Lim Heon-jung, CEO of Support, they examined the current status of theaters and sought solutions to overcome the crisis in the film industry.

Government officials and film industry representatives attending a discussion on the film industry held at CGV Yongsan in Seoul on the 10th are exchanging opinions. Photo by Jinhyung Kang aymsdream@

◆Asia Economy=Over the past two years, government COVID-19 support was conducted through the issuance of consumer discount coupons. The effect on the film industry was not significant. Some argue that the 50% production cost recovery guarantee applied by multiplexes to 'Mogadishu' and 'Sinkhole' was more efficient. In fact, these two films were the only Korean films included in the top 10 box office rankings last year. However, issues such as fairness in the selection process could arise.

◆Lim Heon-jung=The consumer discount coupons were a poor project that primarily benefited The Walt Disney Company. Last year's most attended film, 'Spider-Man: No Way Home,' was unrelated to this. Even if discount coupons are issued excessively, theaters cannot be crowded. Interesting films need to be released. Policies are needed to open the way for films with large production budgets to be released and to support diverse marketing. In that sense, 'Mogadishu' and 'Sinkhole' were like rain in a drought. Without these two films, our company would have gone bankrupt.

◆Jang Won-seok=Despite the pandemic, theaters barely sustained their lifeblood thanks to heavy users. To attract more audiences, policies that encourage the release of anticipated films are necessary. Multiplexes have provided various support despite incurring losses. When I released 'Spiritwalker,' I even charged an additional 2,000 won per ticket. Knowing the theater situation so well, I felt sorry later. The government needs to help. If resources are limited, more efficient measures than now must be found.

Jae-Hyun Kim, Director of Content Policy Bureau, Ministry of Culture, Sports and Tourism / Photo by Jin-Hyung Kang aymsdream@

◆Jo Sung-jin=So far, two methods have been applied to encourage film releases: additional payments of 1,000 to 2,000 won and a 50% production cost recovery guarantee. Since deficits are large, the burden is quite significant. Lotte Cultureworks and Megabox are in the same situation. Audiences naturally come to theaters when films they want to see are released. There are quite a few Korean films currently stored in warehouses. Over time, they may become outdated. New film production also becomes difficult. Continuous incentives must be introduced for the film industry to normalize.

◆Kim Jae-min=We released 'Hostage' last summer without receiving the 50% production cost recovery support. However, I believe we enjoyed some effect as audiences flocked to theaters in a short period. Theaters need to recover their strength for a rich buffet of films to be available. In Korea, 80% of film industry revenue is generated at theaters. Recently, however, government support has been excessively focused on Over-The-Top (OTT) services. Consumer discount coupons certainly help in terms of gaining universality. But now is no longer the time for that. It is urgent to create an environment where distributors and producers can release films with confidence. More research and analysis-based support is required.

◆Kim Moo-sung=Universal benefits can be harmful as audiences may become accustomed to consumer discount coupons. This could lead to a trend where films are released without receiving their proper value. In terms of audience attraction, the multiplexes' self-help measures were more effective than the four rounds of consumer discount coupons. I hope support shifts with an emphasis on the fact that films need to be released for related industries to circulate.

Park Ki-yong, Chairman of the Korea Film Council / Photo by Jin-hyung Kang aymsdream@

◆Park Ki-yong=We are well aware of the need for release promotion support. There are difficulties in securing the budget for related measures. Ultimately, it is a matter of circulation. We must first break the flow where blockages occur one after another due to arteriosclerosis. Although theaters are at the peak, it is also important to consider individuals. We will seek a system that can encompass this and create a virtuous cycle structure.

◆Kim Jae-hyun=I agree on the importance of release support. However, I hope consumer discount coupons are viewed from a different perspective. This project implies not only release support but also the enhancement of the public's cultural enjoyment. The entities paying the Film Development Fund are filmmakers and the public. Consumer discount coupons are a project that returns this, so release support should be seen as an additional concept. Therefore, I believe the release support budget should be secured separately. Since many opinions have been expressed in the screening sector, I expect them to be reflected later.

◆Jang Won-seok=Extraordinary times require extraordinary policies and strategies. However, government policies tend to be routine. As a producer, I do not have a particularly good relationship with theaters. But for everyone to survive, we have no choice but to support them now. Waiting a little longer will not improve the situation. This is the greatest crisis in the 100-year history of Korean cinema. It cannot even be compared to the Screen Quota Movement or the eradication of illegal downloads. The government must protect the film industry.

Jongjin Cho, Head of Strategy Support at CJ CGV / Photo by Jinhyung Kang aymsdream@

◆Kim Jae-min=Around this time last year, there was a joke about 'What if films suddenly flood the market next year?' In reality, countless films are postponing their release. None can guarantee release even this year. If this continues, distributors will lose their investment capacity. This is not about supporting only the specific industry of theaters. Now is the time to find the fastest and most effective method.

◆Jang Won-seok=During the pandemic, we released four films: 'Beasts Clawing at Straws,' 'Intruder,' 'Forgotten,' and 'Spiritwalker.' We are preparing other films, but distributors are now discouraging releases. As the situation worsens, attention is turning to dramas. Korean films have achieved many successes both domestically and internationally. It would be disappointing to dismiss the situation by saying it will somehow improve.

◆Asia Economy=Unfortunately, the Film Development Fund is depleted due to a decrease in theater levies and business expenses. Although the collection period has been extended until the end of 2028, it seems difficult to return to the times when over 50 billion won was collected annually. In fact, the Korean Film Council secured this year's budget with an 80 billion won loan from the Public Fund Management Fund.

Kim Moo-sung, Executive Director of Marketing Division at Lotte Cultureworks / Photo by Jin-hyung Kang aymsdream@

◆Park Ki-yong=We have to pay over 1 billion won in interest annually on the loan. Since it is unpredictable how much the Film Development Fund will collect, we have to practice austerity. We are gathering opinions to diversify resources and conducting research, but it is uncertain whether this can be implemented within the year. We will look for various ways to secure separate resources.

◆Kim Jae-hyun=Austerity alone cannot solve the issue. The deficit is large, making short-term resolution impossible. We have requested transfer funds from the Ministry of Economy and Finance for 2023-2024. It will not be easy, but we will do our best.

◆Jo Sung-jin=When the Film Development Fund was established, the government asked the film industry to bear 200 billion won. The fund collected that year was 260 billion won. It was appropriate to return 60 billion won. Over the past 14 years, about 540 billion won has been collected with one extension. Last year, an additional extension was granted, requiring payments for another seven years. This money is shared equally by distributors, producers, and theaters. It is regrettable that no substantial support has been provided using these funds even during the pandemic. Although we agreed to the additional extension for the greater good, we cannot keep repeating the same method indefinitely. The government should make bold investments.

Jae-min Kim, Head of New Film Business Division / Photo by Jin-hyung Kang aymsdream@

◆Kim Jae-min=When the market dies, the Film Development Fund collected also decreases. Therefore, promoting film releases is even more necessary. Funding should be secured through supplementary budgets to create an environment pursuing commercial profits. No investor is willing to accept losses. Various efforts were made last year, such as handing over films to OTT platforms, but there were limits. The number of theater audiences is less than the number of COVID-19 confirmed cases. I hope we can face reality a little more soberly.

◆Kim Moo-sung=Looking at the use of the Film Development Fund so far, there has been almost no portion for theaters. It is frustrating that even when we requested to use it for the entire film industry during the pandemic, it was not realized. It should be used effectively during such a critical time to set a good precedent and build trust. However, this year seems not much different from before, which only increases skepticism.

◆Lim Heon-jung=With increasing debt, the Film Development Fund is a huge burden. It should be exempted even during the pandemic. Although related legislation passed last year, it does not apply to new screening venues. We have paid 2.1 billion won so far but have received no assistance. I believe the Korean Film Council should at least establish a credit guarantee fund or provide guarantees.

Jang Won-seok, CEO of BA Entertainment / Photo by Jin-hyung Kang aymsdream@

◆Park Ki-yong=We agree that support has been insufficient. Reviewing related matters over the past two years, there was only quarantine support. Countries like France have much larger film funds, so their support scale is much greater. The Korean Film Council is in a situation where it might close due to lack of resources. We will find ways for everyone to coexist.

◆Asia Economy=With the rise of OTT, the concept of film itself has become ambiguous. There are many opinions that the Korean Film Council should redefine this.

◆Park Ki-yong=Personally, I still think film is the axis of the video industry. From that perspective, two options can be considered. First, like the Centre National du Cin?ma et de l'Image Anim?e (CNC) in France or the British Film Institute (BFI), place film as the central axis of the comprehensive video industry and expand it. Some even suggest renaming the Korean Film Council as the Video Promotion Institute. The latter option is to deepen film itself and strengthen its foundation. We plan to listen to various opinions from the field and redefine our identity.

Im Heon-jeong, Head of Support / Photo by Kang Jin-hyeong aymsdream@

◆Jo Sung-jin=The former is difficult with only the Korean Film Council's will. Discussions at the government structure level beyond the Ministry of Culture, Sports and Tourism are needed. I hope there will be continuous consideration on this. In the mid to long term, I believe the former is the right direction.

◆Park Ki-yong=We cannot resist the prevailing trend. Who would have predicted such a world? The Korean Film Council will hold the center and provide appropriate guidance.

◆Kim Jae-hyun=I will prioritize the opinions expressed today and reflect them in policy. Thank you for taking your precious time.

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