Aside From Film Quota Cut, Industry Faces Challenges
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By Kim Tae-jong
Staff Reporter
Following the government's announcement last month that it will slash the domestic screen quota, filmmakers and actors have raised strong concerns over the future of South Korea's burgeoning movie industry.
But, according to industry experts, the removal of the protectionist measure is only one of a number of looming problems for the country's film business, which they describe as systemically weak, unbalanced and poorly regulated.
One of the problems that they claim can prevent local films from flourishing in the future is domination of a few film production companies in the market.
"The polarization in the local film industry is getting worse", said Oh Jeung-il, assistant research fellow at the Korea Institute for Industrial Economics & Trade. "Not many film companies have made profits, and the ones that have tended to be big companies".
As the market is dominated by a few gigantic conglomerates, it is impossible to expect cultural diversity in local films, he said.
"Local films have captured slightly more than 50 percent of the market, which is really a remarkable figure, and there have been massively successful films breaking the 10 million-viewer-mark", he said. "But this means nothing if the industry cannot develop and expand in a healthy manner".
Oh pointed out that one of the main reasons behind the polarization can be found in the emergence of big companies, which are involved in almost everything related to films, such as actor management, investment, film production and marketing, and running multiplexes.
"If the trend continues, all the small and medium-sized companies will either disappear or be merged into the big companies", he said.
What makes the situation even gloomier for small- and medium-sized production companies is a crisis in the secondary film market, which includes DVD and home video sales.
According to a report by the Korean Film Council (KOFIC), most films companies largely depend on box office revenue, which makes up more than 70 percent of their total earnings.
"Once a film fails to attract enough moviegoers at their box office release, there is technically no way to cover the huge losses", said Yu Hyeong-jin, researcher of the policy research and development department at KOFIC.
In other countries, sales of DVD and home videos or other copyright sales can serve a safety net for film production companies to cover their box-office failures or earn extra income, Yu said.
The unbalanced market system between the ticket sales and the secondary market increases the risk for production companies, which makes them choose safe topics for their films rather than producing more diversified movies, he said.
The crisis of the secondary market is largely due to the illegal circulation of movie files.
A report by KOFIC said the losses from the circulation of illegal movie files is estimated at about 300 billion won a year, about 20 percent of the annual production budgets of all local films combined.
But while no strict measures have been introduced by the government to stop illegal circulation of movie files, more and more Internet users are downloading films without recognizing the damage their action can do to the industry.
According to research by the Ministry of Culture and Tourism, about 90 percent of all the respondents said that they have downloaded a movie file. And only 29 percent said that those circulating movie files should be punished.
"As it is already a trend to download movies, it is more realistic to systemize this as a new area where film production companies can earn profits", Yu said.
Staff Reporter
Following the government's announcement last month that it will slash the domestic screen quota, filmmakers and actors have raised strong concerns over the future of South Korea's burgeoning movie industry.
But, according to industry experts, the removal of the protectionist measure is only one of a number of looming problems for the country's film business, which they describe as systemically weak, unbalanced and poorly regulated.
One of the problems that they claim can prevent local films from flourishing in the future is domination of a few film production companies in the market.
"The polarization in the local film industry is getting worse", said Oh Jeung-il, assistant research fellow at the Korea Institute for Industrial Economics & Trade. "Not many film companies have made profits, and the ones that have tended to be big companies".
As the market is dominated by a few gigantic conglomerates, it is impossible to expect cultural diversity in local films, he said.
"Local films have captured slightly more than 50 percent of the market, which is really a remarkable figure, and there have been massively successful films breaking the 10 million-viewer-mark", he said. "But this means nothing if the industry cannot develop and expand in a healthy manner".
Oh pointed out that one of the main reasons behind the polarization can be found in the emergence of big companies, which are involved in almost everything related to films, such as actor management, investment, film production and marketing, and running multiplexes.
"If the trend continues, all the small and medium-sized companies will either disappear or be merged into the big companies", he said.
What makes the situation even gloomier for small- and medium-sized production companies is a crisis in the secondary film market, which includes DVD and home video sales.
According to a report by the Korean Film Council (KOFIC), most films companies largely depend on box office revenue, which makes up more than 70 percent of their total earnings.
"Once a film fails to attract enough moviegoers at their box office release, there is technically no way to cover the huge losses", said Yu Hyeong-jin, researcher of the policy research and development department at KOFIC.
In other countries, sales of DVD and home videos or other copyright sales can serve a safety net for film production companies to cover their box-office failures or earn extra income, Yu said.
The unbalanced market system between the ticket sales and the secondary market increases the risk for production companies, which makes them choose safe topics for their films rather than producing more diversified movies, he said.
The crisis of the secondary market is largely due to the illegal circulation of movie files.
A report by KOFIC said the losses from the circulation of illegal movie files is estimated at about 300 billion won a year, about 20 percent of the annual production budgets of all local films combined.
But while no strict measures have been introduced by the government to stop illegal circulation of movie files, more and more Internet users are downloading films without recognizing the damage their action can do to the industry.
According to research by the Ministry of Culture and Tourism, about 90 percent of all the respondents said that they have downloaded a movie file. And only 29 percent said that those circulating movie files should be punished.
"As it is already a trend to download movies, it is more realistic to systemize this as a new area where film production companies can earn profits", Yu said.
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