[Cinema in Crisis①] Weekend Tickets at 15,000 Won... Korean Films Struggle to Pass the Break-Even Point

Enduring the Worst Recession in the COVID Era... Ticket Price Increase for the Three Multiplex Chains
Wide Release Strategy Remains Despite Struggles... Poor Opening Day Leads to Box Office Failure
Famous Directors and Actors Turn to OTT... Attempting Crisis Escape Through Customer Preference Analysis

Editor's NoteJuly and August are the peak seasons for movie theaters. The overlap of office workers' vacations and school breaks for elementary, middle, high school, and university students creates favorable conditions for box office success. Distributors rush to release films with guaranteed mass appeal. Even with fierce competition, they believe demand is sufficient. However, this year has proven to be a misjudgment. The number of moviegoers over the two months totaled only 28,844,662, which is less than last year's 31,248,077, already contracted due to COVID-19. Revenue also dropped by 39.37 billion won to 283.38 billion won. Various factors contributed to this repeated neglect: weaker content than before, increased ticket prices, expansion of online video streaming services (OTT), and declining service quality... As multiple issues have been identified, a new paradigm to overcome short-sighted collective selfishness is required. This is the establishment of coexistence and mutual growth.

[Image source=Yonhap News]

The three major multiplex chains (CGV, Lotte Cinema, Megabox) need over 13 million monthly viewers to avoid losses. Before the COVID-19 outbreak, this was easily achievable. In July and August of 2018 and 2019, the number of viewers was 50,034,944 and 46,702,586 respectively. This year, it is only 28,844,662, far too little to resolve the accumulated debts over the past three years.

It was not a drought for movies either. Starting with Tom Cruise's "Mission: Impossible ? Dead Reckoning PART ONE," followed by director Ryu Seung-wan's "Smugglers," director Kim Sung-hoon's "Confidential Assignment," director Kim Yong-hwa's "The Moon," Lee Byung-hun's "Concrete Utopia," director Christopher Nolan's "Oppenheimer," director Jung Woo-sung's "Guardian," and Yoo Hae-jin's "Sweet & Sour: 7510," many anticipated films were released one after another. However, there was no so-called "blockbuster." Especially Korean films barely reached the break-even point with one or two titles.

The main cause is undoubtedly the increased ticket prices. Multiplexes raised prices three times by 1,000 won each during the pandemic period, citing operating losses. The 2D ticket price is now 14,000 won on weekdays and 15,000 won on weekends. As the threshold rose, attracting viewers became more difficult. Jo Jin-ho, head of CGV's domestic business division, said at the "2023 CGV Film Industry Media Forum" held on the 30th of last month, "Viewers have become more selective in their movie choices and their expectations have risen."

However, there was no intention to lower prices. He argued, "Consumers do not want ticket prices reduced by 1,000 or 2,000 won. They want around 10,000 won. That was the price before 2016, so there is a gap with reality." The year with the highest number of viewers on record was 2019 (226,678,777). At that time, the 2D ticket price was 11,000 won on weekdays and 12,000 won on weekends.

[Image source=Yonhap News]

CGV aims to respond to the gap between reality and ideals with a tailored strategy based on customer behavior analysis. The most notable changes are "So-hwak-jaem" (small but certain fun) and reverse runs. The former is confirmed by the trend of a later average viewing time. According to their own survey, the "average viewing time" over the past year is 15.1 days, 4.3 days longer than 10.8 days in 2019. This means some viewers watch certain films more than two weeks after release.

This new trend is especially prominent among teenagers and people in their twenties. The increase in average viewing time was 6.3 days and 4.7 days respectively, exceeding the overall average of 4.3 days. This is closely linked to reverse runs. "Elemental," which attracted over 7.1 million viewers, is a representative example. In its 3rd to 4th week, it had more admissions than in the 1st to 2nd week. CGV explained, "The highest-grossing animation of all time, 'Frozen 2' (13,747,792 viewers), had 42.5% of its viewers in the first week, with subsequent admissions steadily decreasing. 'Elemental' is different. It peaked at 16.9% in the 4th week and then gradually declined. This shows that the box office pattern has changed from the past."

However, in July and August, the typical blockbuster "wide release" strategy (opening on as many screens as possible) was still applied. For example, "Smugglers" had a screen share of 48.5% on its release day (July 26). It maintained the 40% range for over a week but dropped to 21.7% on August 2, when "The Moon" (24.6%) and "Confidential Assignment" (24.3%) were released. The next day, "Smugglers" regained the highest share at 24.6%. It consistently held the 30% range until the release of "Concrete Utopia" on August 9.

The reason "The Moon" and "Confidential Assignment" received relatively fewer opportunities is simple. The number of viewers on their release day (89,289 and 121,999 respectively) was less than "Smugglers" (193,441). One week later, their screen shares plummeted to 5.9% and 12.4%, resulting in box office failures. Multiple distribution officials agreed, saying, "So-called preferential screen allocation in the box office affects films more than their quality or viewer preference. This is especially true for diversity films." "The City of Crime 3," which recorded the highest number of viewers this year, once had a screen share of 40.6%. It maintained over 30% for two weeks, attracting 10,682,622 viewers. There was no significant difference in theater allocation or screen distribution.

[Image source=Yonhap News]

In fact, distributors enter the competition knowing that success or failure can be decided in a single day. This month is no different. On the 27th, "Spider's Web" starring Song Kang-ho, "Dr. Cheonbak's Exorcism Research Institute: Secret of the Snow Scenery" starring Kang Dong-won, and director Kang Je-gyu's "1947 Boston" will be released simultaneously. Multiple insiders predict, "All are aiming for the Chuseok holiday season, but it seems difficult to generate box office success on the scale before the pandemic. Films with poor viewer turnout on release day may not even get a chance to rebound." They emphasized, "Ultimately, this benefits neither movie theaters nor Korean cinema."

Indeed, Korean films have been suffering a severe slump since early this year. Investors have suffered heavy losses over the past three years and have gradually withdrawn. Major investors such as CJ ENM, Lotte Cultureworks, and Showbox are not in a position to increase their investment ratio by 20-30%. Once films produced during the pandemic are released, the supply may dry up. To make matters worse, well-known directors and actors are turning their backs to OTT platforms. With slow generational change, a prolonged drought may occur around 2025.

The cradle for nurturing new creators is none other than movie theaters. Providing sufficient opportunities for diversity films is essential for a virtuous cycle. The reality is the opposite. Among Korean diversity films this year, the best-performing "Next Sohee" (117,070 viewers) was screened only 10,891 times. This is one-thirtieth of "The City of Crime 3" and one-fifteenth of "Smugglers." Moreover, these screenings were scheduled in early mornings or late nights when viewers rarely attend, failing to attract attention.

Multiple insiders said, "Even though the films contain content that resonates with the main audience of people in their 20s and 30s, they were neglected because they did not achieve satisfactory results in the first week of release." They added, "If blocking the path of talented directors continues, it will be difficult to promise a future for both Korean cinema and movie theaters." There is concern that they may become like steamed buns without filling.

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