Triumph and pain were bedfellows last year for the Korean film industry. But Berlin’s European Film Market and the imminent Hong Kong FilMart see Korean companies putting on a brave face.
Korean cinemas were in a defensive mode early on in the coronavirus pandemic, as a population familiar with epidemics chose to stay away from crowded places. Social-distancing regulation caught up and then was wound down again in summer. That allowed for the successful theatrical releases of “Deliver Us From Evil,” which scored $34.4 million; “Peninsula,” which grossed $29.5 million; and the year’s top Hollywood film “Tenet” ($16.4 million).
But the window of opportunity closed quickly as autumn and another wave of infections swept in. New capacity restrictions were applied to cinemas.
And even as restrictions have eased audiences have scarcely responded. Weekend box office in what was previously the world’s fourth most-lucrative cinema market has averaged $3 million to $4 million so far in 2021.
Government support for film was slow in coming compared with countries such as Australia and New Zealand. The irony was not lost on those who, only months earlier, watched politicians bask in the reflected glory of the four Oscar wins by “Parasite.” By summer, cinemagoers were offered coupons that gave discounts at cinema turnstiles. And in October, the finance ministry announced limited support for small and medium-sized businesses.
Meanwhile, South Korea’s three largest cinema chains recorded cumulative losses of 619 billion won ($551 million) in 2020. Some screens have been turned into gaming venues or rented out for exhibition of non-film content.
Many film distributors postponed the releases of key titles, further delaying the theatrical recovery. Other titles switched instead to deals with streaming platforms. That was the case for 2020 Berlin actioner “A Time to Hunt” and for anticipated sci-fi title “Space Sweepers,” which originally targeted the Chuseok holidays in fall, but instead debuted on Netflix last month.
The film production sector stuttered as different waves of the virus outbreak caused tightening and relaxation measures — early casualties were films shooting overseas, including Megabox’s “Negotiations” and “Bogota,” and Showbox’s “Kidnapping.” But locally too, feature film production recovery has been slow.
Andy Yoon, formerly of the Korean Producers’ Guild, says the box office slump has hit investment and calculates that film production is currently 20% of normal.
“It is difficult to release new Korean movies. That makes it hard to invest and produce movies,” says Yoon. “Even if the audiences return to theater this winter after the COVID-19 vaccination, it may be difficult for new Korean film investment and production to become return to prior levels.”
That said, recent months have seen post-production continue and some stalled projects competed, meaning that sales companies lineups for Berlin and FilMart are far from threadbare.
“We have been able to do pre-sales for certain anticipated titles. Some are ready, others not,” says Suh Young-joo, CEO of leading indie sales firm Finecut.
“The traditional marketplace is currently upside-down,” says Justin Choi, previously a senior executive at exhibition and distribution giant Lotte MediaWorks, and who last year co-founded independent development and production firm Covenant Pictures. “The theatrical market is horrible, taking longer to recover than we thought, but there is now more emphasis on streaming, meaning that producers are still active.”
In recent days, Netflix confirmed that it has 3.8 million paying subscribers in the country. That follows a strategic decision to develop a deep slate of Korean originals (not just shared titles and acquired content) that has got locals and overseas audiences tuning in. Taking this further, Netflix announced the long-term lease of two studio complexes in January, and in February said it would spend close to $500 million in the current year on Korean content. That would put it on a par with the very largest local studios and broadcasters.
Galvanized by consumer take-up for Netflix, Korean firms are also pouring in to streaming and content. These include Waave (a consortium of broadcasters and a telco), CJ ENM’s TVing and e-commerce firm Coupang, as well as expanded streaming offerings from local internet giants Kakao and Naver, which are styling themselves as IP companies. Naver, owner of Webtoons, recently spent $920 million acquiring story depository Wattpad and investing in BTS agency Big Hit Entertainment.
Yoon worries that rights acquisitions by streamers are not enough to replace the revenues lost to theatrical. “The Korean film industry needs to think about a new paradigm of how it can coexist with the TV and OTT drama industry.” For Choi and some others that change is reason for optimism. “Netflix can only get involved with 30-40 pieces of Korean content per year. There is plenty of room for others.”
How much of those projects make their way to conventional film rights markets, like EFM, is another matter.