“The ecosystem of the industry is collapsing”: Can Korea’s crisis-hit film sector recover?

Having kicked off in 1996 with the convention-defying launch of Busan International Film Festival, the modern Korean cinema industry is barely 30 years old. Those three decades have been a roller­coaster ride that included growing international acclaim and industry success punctuated by multiple periods of adversity. However, the ongoing film industry downturn is the deepest and most enduring of those crises.

“Investment has stopped, and the film production scene has run out of money,” said newly installed minister of culture Chae Hwi-young earlier this month. “The ecosystem of the film industry is collapsing to the point where filmmakers cannot make a living.”

As with an earlier crisis in 2005, when it was feared that production budgets had inflated to an unsustainable level — $5m for a tentpole title was considered expensive — the current challenges follow a period of growth and global influence. And for the outside world, a perception of Korean success may still be masking the depths of the downturn.

“The reality I’ve seen, heard and felt while visiting various sites is so different from the glamorous image that it left me feeling perplexed and embarrassed,” said Chae.

The Korean film industry has suffered multiple compounding injuries since the triumphs of 2019, when theatrical box office reached an all-time high and Bong Joon Ho’s Parasite won the Palme d’Or at Cannes before becoming the first non-English language film to win the Academy Award for best picture.

As in other territories, the Covid-19 pandemic depressed cinema box office for at least two years and gave a boost to premium video streaming as an alternative for audiences. The impact has been especially severe in Korea, however, and has made recovery both slow and uncertain.

In cash terms, gross cinema revenues collapsed from $1.38bn (krw1.91tn) in 2019 to lows of $369m (krw510bn) in 2020. But after three years of tepid recovery, 2024 saw a reversal to $861m (krw1.19tn), still 38% shy of pre-pandemic levels. This year is weaker still.

With no sign of a Korean blockbuster — traditionally defined as a film selling more than 10 million tickets — box office in the first eight months was down a further 22%. This summer has seen a half-decent performance driven by local titles such as comedy drama My Daughter Is A Zombie, action fantasy Omniscient Reader: The Prophecy and horror Noise, as well as Hollywood tentpoles Jurassic World Rebirth, F1: The Movie and Japanese anime Demon Slayer: Kimetsu No Yaiba Infinity Castle.

Changing habits

Restarting the supply of Korean films post-pandemic — and therefore revenue, profits and future slate investment — was further hampered by the structure of the industry itself. With local theatrical revenues typically comprising the majority of Korean films’ earnings, few distributors were willing to risk a release until they were confident that market conditions had stabilised.

The total distribution revenue of the five major investment-distribution companies — CJ ENM, Lotte Entertainment, NEW, Showbox and Plus M Entertainment — was $568m (krw786bn) in 2019 but dropped to $347m (krw480bn) in 2022 and $316m (krw437bn) in 2023, according to data from the Korean Film Council (Kofic).

Theatre operators responded to the downturn by raising ticket prices — though these increases have since been eroded and latterly offset by 4.5 million government-backed discount vouchers — and by copious reissues and releases of alternative content, such as concert films.

At corporate level, the exhibition giants closed screens, sought voluntary retirements and raised fresh capital. Additionally, Lotte Cinemas and Megabox, respectively Korea’s second- and third-largest chains, have applied to merge. The deal has provisional approval but is not completed. CJ-CGV, the largest operator, is reported to be trying to sell or spin off most of its overseas cinemas.

Such weakness in the face of powerful entertainment alternatives has eroded the Korean public’s once avid cinemagoing habit. Annual attendance has dropped from a world-leading four visits per person to 2.54.

“Where cinemas used to be for dating, now renting a room in a motel for an evening and watching Netflix comes to a similar price,” says Jonathan Kim, a veteran Korean producer.

The hiatus gave streaming companies an opportunity to reshape the industry. Foreign players, notably Netflix and Disney, invested heavily in Korean drama series and films that would never play in cinemas. Fierce competition came from well-capitalised and nimble local operators including Tving, backed by CJ ENM, Naver and JTBC; Wavve, backed by SK Telecom; and Coupang Play, backed by a Korean enterprise that has successfully kept Amazon from scaling up in e-commerce.

The effect was to suck production, directing and on-screen talent away from decelerating feature films and into fast-moving TV and streaming content. The shift had the side-effect of inflating production costs and salaries.

Korea previously had a well-dev­eloped film investment ecosystem. Parasite, produced by Barunson E&A, was financed by a quartet of institutional investors and three hedge funds alongside the CJ ENM conglomerate that acted as Korean distributor and international sales agent. Today, outside investors have largely withdrawn from the sector.

Korea’s downturn may foreshadow trends in other countries. “South Korea being so advanced in terms of online technology meant that even without the response to the Covid pandemic accelerating the move from theatres to streaming, this day was always going to come,” says academic Russell Edwards.

“It’s perhaps better to think of Korea’s film industry as a canary in the coal mine that foreshadows what will happen, indeed is happening, in other markets… when those audiences also opt for online over in-person cinema.”

Deep cutbacks

The contraction of production has been brutal. Kofic reported that the five major integrated groups plan to release only 10 to 14 Korean commercial films in 2025. That compares to 35 released in both 2023 and 2024. CJ ENM declined to detail its recent cutbacks, but said it is “executing strategies to strengthen the sustainability” of its film business.

“During this transitional period of market change, rather than predetermining the number of films, we plan to establish criteria focused on enhancing the profitability of each individual film and invest in projects suited to the evolving market,” a company spokesperson told Screen International. “Through this effort, we aim to break the vicious cycle where declining film profitability leads to reduced investment.”

CJ ENM recently financed Park Chan-wook’s No Other Choice, which premiered in Competition at Venice and opened this year’s Busan International Film Festival.

The emphasis on survival and finding alternative routes to profitability is a common refrain.

Several of the biggest-name directors and stars have taken a leaf out of the US model and become producers of their own content, moves that enable them to control their projects, prices and brand value. Examples include Ma Dong-seok (aka Don Lee) of The Roundup film franchise and Squid Game star Lee Jung-jae, whose Artist Studio this year received a capital injection, merged with a marketing firm and signed a development deal with Andy Serkis’s UK-based Imaginarium Productions.

Beyond borders

Overseas outreach and involvement in co-productions by Korean producers in both the film and TV sectors is accelerating after a long period when the local market was largely sufficient for material, investment, production and revenue.

While the country’s myriad film sales companies had previously focused almost exclusively on Korean titles, Barunson E&A has diversified to invest in or pick up a variety of titles from across Asia. These include Vietnamese drama Don’t Cry, Butterfly, which premiered at last year’s Venice Film Festival, and Indonesian horror titles Respati and Sorop.

“As there were fewer third-party films to pick up, we used the Covid time to diversify and develop our own IP,” says veteran sales agent Suh Young-joo, who heads Finecut. She produced an independent film that released in 2022, a 12-part series that played on Netflix and tvN in 2023, and psychological horror film Noise, which had a production budget of $4m. Released in June, it has recorded more than 1.7 million admissions and is heading for profitability.

Traditional industry leader CJ ENM has in the last year struck a flurry of overseas deals that include a music venture with Japan’s Hakuhodo and a two-way development, financing and distribution deal with Warner Bros Motion Picture Group, covering English- and Korean-language projects. These are in addition to leveraging its IP library in one-off instances such as Yorgos Lanthimos’s Venice title Bugonia, a remake of CJ’s 2003 feature Save The Green Planet!.

Launching an “Asian content initiative”, CJ ENM is also co-founder of First Light StoryHouse, a new label focusing on Asian and Asian American narratives that includes former Academy of Motion Picture Arts and Sciences president Janet Yang and Dominic Ng, chair and CEO of East West Bank.

“I’m sure there will be another chapter in the Korean wave,” says Finecut’s Suh. “There are many original Korean IP, from webtoons or books, which can be accessed by foreign customers. The question is which Korean creators have the spark to light up industry people and audiences.”

Multiple other initiatives may be bubbling under. A handful of Korean companies believe that by raising the quality threshold above what is being produced by mainly Chinese companies they can take micro dramas (aka vertical videos, watched on mobile phones) to a global audience. These include major TV firm KT Studio Genie and indies WhyNot Media and Bamboo Network.

“Korea has the potential to lead the world’s micro-drama market, especially if we can build long-term attention, rather than one-time consumption,” says Song Jiyeon, head of content at Korean platform TopReels.

Having recognised that the film industry is in a trough, the country’s new government says it is ready to help finance a recovery effort. This includes a second round of discounted cinema ticket vouchers, following a first push in July.

Some have argued the voucher scheme helps the big conglomerates, rather than creators or the indie sector. “They may be supporting the wrong part,” adds Kim. “Money needs to go to the source.”

But Chae’s ministry may have heeded its critics. Earlier this month, he announced an 80% increase in support for the film industry — with a focus on indie and small- to medium-budget movies, AI production and a virtual production studio in Busan — as well as putting up half the money for a $101.3m (krw140bn) film investment fund. 

• Park Chan-wook unravels the journey of making twisted black comedy ‘No Other Choice’