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Berlin: Demographics, Technology Favor the Revival of South Korean Indie Films

Cinema ticket sales in South Korea edged ahead by just 1% last year, with the market share for local films dropping to 50%. But the situation could have been worse had 2014 not seen the emergence of the “art-buster” category of films.

The arthouse films that broke out to become commercial blockbusters included music drama “Begin Again,” with 3.42 million admissions, and local documentary “My Love, Don’t Cross That River,” which took the theatrical record for a factual film with 3.73 million admissions.

Indie and arthouse films attracted a combined 14.9 million spectators in 2014, according to data from the Korean Film Council’s data service Kobis. Already in 2015, Belgian film “Two Days, One Night” is off to a fine start, drawing 20,000 admissions in its first 10 days, and may be on its way to art-buster status.

A similar art-buster phenomenon is one that in the past made Japan a potent market for international films, before local commercial films edged out both art titles and Hollywood. South Korea, where audiences turn out in droves for quality acting performances, could take Japan’s place, but numerous questions cloud the sector.

A major driving force behind South Korea’s art-buster movement appears to be the increasingly diversified preferences of the local audiences.

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“We are now in the era of 200 million admissions per year, which means more people are going to theaters. It is natural that their tastes become more diverse. The demand for foreign (specialty films) is especially high from well-educated female audiences between their late 20s and early 40s,” says Lee Sang-yoon, who oversees niche film projects at CJ CGV, a leading theater chain in South Korea. “There is clear demand. The new box office trend is sure to become stronger this year.”

While the demand is there, the barriers to entry remain high, especially for indie titles, to secure good screening opportunities.

“The strength of independent films comes from the fact that they speak for the minority and thus can contribute to the cultural integration of the society. Distributors and financiers need to see the value of indie films, not just their commercial potential,” says Jin Mo-young, a veteran independent producer and director of “My Love, Don’t Cross That River.”

Part of the problem for independents has been the operation of the vertically integrated groups that span production, distribution and exhibition. At the end of last year, CJ CGV and Lotte Entertainment were both sanctioned by the country’s Fair Trade Commission, which ruled that the exhibitors had unfairly favored films released by their affiliated distribution companies. The FTC fined the pair a combined $5 million and both companies have agreed to put in place corrective measures. One of these is to expand the proportion of screen time for specialty and independent films to 50%.

Despite those measures, it may be difficult to break the patterns of the past. Under the watchful eye of the regulator, CJ Entertainment has in the past month seen another of its films “Ode to My Father,” which is unspooling in Berlin’s Panorama section, dominate screens and sell 10 million tickets. And CGV is itself a leading distributor of indie titles.

An emerging alternative distribution route is video on demand, which is helped by the fact that South Korea has the world’s leading penetration of high-speed Internet connections, both fixed and mobile.

South Korea’s VOD market was worth $300 million in 2014, an increase of 25% year-on-year; Korean indies “Murderer” and “Stray Dogs” attracted almost the same audience volume in theaters and on VOD.

The growing commercial significance of the VOD market also helps explain the large number of films being imported into South Korea — an astonishing 1,114 last year, according to Kobis, up from 907 in 2013. But as they seek even a small theatrical release to help with marketing, this mass of indie films also makes the market more crowded.

“The VOD market, especially the IPTV sector, should be a springboard for small films. IPTV can host several thousand films thus lowering the barrier to entry,” says Kim Jung-sik, CEO of independent digital syndicator Indieplug.

“However, the current IPTV market largely follows the unfair system of multiplex theater chains and favors the soon-to-be box office hits. In spite of the large number and wide array of content that the service hosts, viewers only choose from a very limited number of ‘already-popular’ choices that appear on the home page.”

The new opportunity presented by VOD may improve the domestic commercial viability of some of South Korea’s best-known auteurs, such as Hong Sang-soo, who have previously had to rely heavily on overseas festivals and international sales.

At the end of January, Hong started shooting his latest movie. As usual, it is untitled and he has kept the plot under wraps — but he did reveal that the cast includes Kim Min-hee (“No Tears for the Dead”) and Ko Ah-sung (“Snowpiercer”).

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