Double Hardship for Theaters... Ticket Prices Raised 3 Times Since the Pandemic

Adult Movie Ticket Prices to Rise Up to 40% Over 2 Years
Audience Decline and OTT Rise... Shrinking Market Position

Since the COVID-19 pandemic, movie theater ticket prices have been soaring sharply. / Photo by Song Hyundo, Asia Economy intern reporter

[Asia Economy Reporter Lim Ju-hyung, Intern Reporter Song Hyun-do] Since the COVID-19 pandemic, movie theaters have raised ticket prices three times over two years. Although ticket prices have steadily increased over the past several decades, the recent hikes over the last two years are unprecedented. The film industry explains that considering the accumulated deficits during social distancing periods and high inflation, the increase in ticket prices was an unavoidable decision. Moreover, with the emergence of new competitive industries powered by new technologies such as Over-The-Top (OTT) streaming services, the space for movie theaters continues to shrink.

CGV, the largest multiplex theater chain in South Korea, raised movie ticket prices by 1,000 to 5,000 KRW in April. Since the spread of COVID-19 began in 2020, CGV has raised ticket prices three times over two years.

With this increase, adult 2D movie ticket prices are adjusted to 14,000 KRW on weekdays and 15,000 KRW on weekends. Special technology theaters such as 'IMAX' will see a 2,000 KRW increase, and premium theaters will increase by 5,000 KRW. Additionally, as CGV, the industry leader, implemented the price hike, other theater chains have made similar price adjustments.

Regarding this, CGV stated, "Deficits have accumulated since COVID-19, intensifying the management crisis, and the entire film industry ecosystem, including production, investment, and distribution, can no longer sustain itself," adding, "We had no choice but to raise prices to survive."

In 2020 and 2021, when social distancing continued, theaters had to endure massive operating losses. / Photo by Yonhap News

In fact, the combined operating losses of the 'Big 3' domestic theater chains?CGV, Lotte Cinema, and Megabox?amounted to nearly 1.0651 trillion KRW in 2020 and 2021. The inflation rate, which stood at 6% as of June this year, also poses a significant burden on companies, affecting the costs of maintaining theater facilities and services.

However, some argue that even considering these factors, the recent price hikes are excessive. Before COVID-19, general movie ticket prices were around 8,000 to 10,000 KRW. In just two years, prices have been adjusted to 14,000 KRW, an increase of about 40%, nearly a 20% annual rise. According to data from the Korean Film Council (KOFIC), domestic theater ticket prices have increased by about 5-7% annually over the past several decades. This is the first time that the annual increase rate has reached several tens of percent.

The unprecedented price hikes in the theater industry are not only due to massive operating losses but also because the industry landscape is becoming increasingly unfavorable to the film business. The number of moviegoers in South Korea peaked several years ago and has since stagnated, while competition with alternative services such as OTT platforms, which expanded during the pandemic, has intensified.

According to KOFIC data, the number of domestic theatergoers surpassed 200 million for the first time in 2013 and then plateaued until 2018. In 2019, there was a brief increase to 226.68 million, but in 2020, the number plummeted by 73.7% to 59.52 million compared to the previous year. Last year, with continued strict social distancing measures, the number rose slightly by 1.7% to 60.35 million.

Although the film industry was expected to experience a boom this year as daily life began to normalize, the cumulative number of moviegoers in the first half of this year was 44.94 million, and total sales amounted to 225.6 billion KRW, only 48.7% of the same period in 2019 (930.7 billion KRW), the pre-COVID peak. This indicates that the 'normalization of the theater industry' still has a long way to go.

The world's largest streaming platform, Netflix, secured 12 million paid subscribers in South Korea last year alone. / Photo by Yonhap News

OTT platforms, which have emerged as new powerhouses in the video content industry including films and dramas, also threaten the theater industry. Netflix, the world's largest streaming platform, gained 12 million subscribers in South Korea last year alone. Overseas blockbuster producers like Disney and Warner Bros., which used to draw audiences to theaters, have launched their own OTT services, further narrowing the position of theaters. These companies release their latest films on their streaming platforms just weeks after theatrical releases.

According to KOFIC, 76.3% of total revenue in the Korean film industry comes from theaters. In other words, if films are not actively distributed through theaters, not only theaters but also investment distributors and studios could suffer a chain reaction of losses. Compared to countries like the United States, where secondary distribution markets such as VOD have already surpassed theater revenues, the Korean market is vulnerable to declines in audience numbers.

The government is promoting various support measures to revitalize the film industry. On the 21st, the Ministry of Culture, Sports and Tourism announced that it will invest 300 billion KRW in the Film Development Fund over three years from next year to 2025 and expand tax credits for film production costs.

Additionally, to reduce consumers' burden of movie-watching expenses, income tax deduction benefits will be applied. The existing cultural expense income deduction system provided a 30% deduction benefit up to 1 million KRW for workers with an annual total salary of 70 million KRW or less who spent money on book purchases, performance viewing, etc. Movie ticket expenses will now be included in this system.

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