Koreans cut pic quotas

Long sought-for victory for MPAA, but some in local biz outraged

SEOUL — After years of withstanding pressure from U.S. trade negotiators, South Korea agreed to cut its Screen Quota system in half, reducing the number of days that exhibitors must screen local films from 146 to 73.

The move, made as Korea prepares to enter negotiations on a free trade agreement with the U.S., marks a long sought-for victory for the MPAA, which has argued that the quota represents an unfair restriction of access to the Korean market. Significantly, the decision by the South Korean government comes only three months after the adoption of a UNESCO convention on cultural diversity which seemed to strengthen the hand of those who support the quota.

“Today’s announcement reflects a significant step forward in Korea, which is fast becoming one of the most dynamic markets in Asia,” said MPAA prexy Dan Glickman. “We look forward to the opportunity to compete on a fairer basis with the growing Korean industry.”

Members of the Korean film industry were taken unaware by the surprise announcement, and reacted with outrage. “This is a major shock for us, and we feel great shame that our government has truly accepted this insolent request from the United States,” said Chung Ji-young, co-chair of the Coalition for Cultural Diversity in Moving Images.

Yet in some ways the repercussions of this week’s decision may be felt more strongly outside of Korea than within.

Although the quota is widely credited with allowing the Korean industry to make gains in the 1990s, since 2001 local pics’ market share has surged above 50%, and exhibitors have responded by exceeding their quota requirements, sometimes by a significant margin.

Korean exhibitors are at times blunt in characterizing the quota as “irrelevant” in the face of local cinema’s strength. Indeed, the only group of exhibitors who have indicated a likely change in their programming priorities in the face of a quota reduction are arthouse theaters, given that local arthouse fare earns far less than European or Japanese pics.

A 2003 report by the Korea Institute for Industrial Economics and Trade (KIET) also argued that the reduction or elimination of the quota system would have little effect on the Korean industry. “Korean films’ competitiveness stems from the entry of Korean conglomerates into the industry and the introduction of multiplex theaters since the mid-1990s, not from the screen quota,” said the report.

Thus any increased access to the Korean market by U.S. films is likely to be long-term, rather than immediate.

However in recent years many other countries have come to see Korea’s Screen Quota as a model for their own efforts to boost local cinema. China in particular has looked upon Korea’s commercial boom with open envy, and in late 2005 cited the example of France and Korea when announcing its decision to maintain the level of its own import quotas.

The MPAA hopes that the decision by Korea will serve as a precedent for other territories which restrict access to film imports.

“This is also a significant step forward in improving American access to overseas markets,” said Glickman. “Our ultimate goal is a global market for films and filmed entertainment unimpeded by the artificialities of government policies, instead governed only by the tastes and demands of the audiences and our ability to meet those demands.”

In 2005, Korea passed Germany to become the fifth largest theatrical market in the world with $890 million in box office receipts, of which U.S. films accounted for 36-38% (precise nationwide figures are not yet available). The territory has enjoyed nine straight years of growth, during which time its annual admissions have grown from 42 million in 1996 (when Hollywood took a 77% market share) to 143 million last year.

That still means that ticket sales for Hollywood films have grown by 20 million in the decade, from 32 million in 1996 to 52 million last year.

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