Setting the new order

Yang Sung-hee
The author is a columnist of the JoongAng Ilbo.

Seoul Cinema is closing down after 42 years of business. Along with Dansungsa and Piccadilly Cinema, they had formed the landmark theaters of Jongro, downtown Seoul. The oldest Dansungsa became obsolete a long time ago. Big theater franchise CGV has occupied the space of Piccadilly. The sunsetting of old cinema establishments may be a prelude to the demise of theaters.

When I was a rookie reporter on movies, Seoul Cinema had always played previews. Movie stars would parade the narrow corridor. Before tickets had been electronically counted, producers and staff would stand at the box office to count the audience to decipher the response. Politicians also held their cultural events at Seoul Cinema. But the heyday ended with the arrival of multiplex theaters in 2000s.

The closure of Seoul Cinema is a symbolic defeat of midsized old-fashioned movie theaters amid polarization of large franchise multiplexes and boutique theaters, observed Kim Sung-wook, program director at Seoul Art Cinema. On top of losing moviegoers to large multiplexes, they were hard hit by the Covid-19 pandemic. The debacle is not restricted to old movie houses.

Moviegoers last year totaled 59.52 million, down more than 70 percent from the previous year and a record low. Watching movies on streaming platforms like Netflix in place of cinemas became a new norm after the Covid-19 pandemic hit. Some movies chose to premier on over-the-top (OTT) platforms instead of cinemas. Even when the virus danger goes away, people won’t bother to go to the cinemas to watch movies except for special occasions or on dates.

Netflix achieved monthly users of 10 million in Korea in February. More multinationals such as Disney Plus, HBO Max, and Apple TV Plus are due to land in Korea. Local players are also on heavy defense. “OTT has become the first and last. There is no other window,” one industry insider noted.

The global players do not just offer streaming service but are producers rich in original content and intellectual property rights. Disney Plus is home to 8,000 films, animations, documentaries under Marvel, Pixar, 21st Century Fox and National Geographic. HBO Max is the on-demand streaming service of HBO famous for Game of Thrones. Disney has been withdrawing its channel from Korea ahead of its Korean landing. It has been folding Fox channels worldwide after it acquired the TV network. HBO has been scaling back HBO global channels to concentrate on its pay streaming service.

The rise of OTT spells doom for cinemas and TV, but opportunity for content providers. A money war has begun to secure content. Wireless carriers are happy to partner with global OTT operators, but the alliance can suffocate the growth of domestic players. The government has been trying to address the changes in the landscape, but cannot come up with a consistent policy due to divided roles. Conflicts of interests are too large to aid competitiveness of domestic platforms. A seismic change is in the making, but the industry and authorities are scurrying with different approaches, worsening the confusion and conflict.

The cinema industry is asking for an overhaul in the film promotion fund where 3 percent from box-office ticket revenue is set aside. The funding from ticket sales goes to finance the operation of the Korean Film Council and aid independent movie making. The industry is requesting relief in the de facto tax or for it to be used to save the cinema industry. It also demands the same levy on OTT providers. OTT operators must pay video tax in France and share into the film promotion fund in Germany. Responsibility should follow the increased influence to set the new order in the age of OTT dominance.