Korean Distributors Learn to Downsize in Saturated Market
In 2018, the Korean film business stumbled, as local films made with blockbuster budgets and targeting the usual high seasons of Chuseok and Christmas last year failed to deliver blockbuster earnings. So Korean distributors have embraced some tactics to enhance their bottom lines.
Genre films “Monstrum,” “Fengshui,” “The Negotiation,” “Take Point,” “Swing Kids” and “Drug King” tripped over each other and did healthy B.O. but not the blockbuster business that distributors anticipated.
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“The South Korean market has been supersaturated and the market has reached its limit. It is pretty obvious that no one would make significant profit when there are four to five films to watch in one season,” one disappointed producer told Variety.
Now, key distributors have announced lineups filled with fewer blockbusters and more small to mid-sized titles. At the same time they are accelerating overseas expansion and diversifying content formats.
Two of CJ Entertainment’s 2019 tentpoles, Bong Joon-ho’s “Parasite” and Lee Sang-geun’s “Exit,” have budgets of $13.2 million (KRW15 billion), and $11.5 million (KRW 13 billion), respectively — less than 2018’s “Spy Gone North” at $16.8 million (KRW 19 billion) and “Take Point” at $12.4 million (KRW 14 billion).
Another six films slated for 2019, including “Girl Cops” and “Bad Guys: The Movie” also sport budgets of less than $8.8 million (KRW 10 billion). CJ’s current smash hit “Extreme Job” was made with a $8.4 million budget (KRW 9.5 billion) and has grossed $122 million.
Lotte is also making only two blockbusters with budgets of over KRW 10 billion ($8.8 million): “The Divine Fury” and “Astronomy.” Lotte has traditionally seen more success with mid-sized titles than with mega-budget films, with the exceptions of its 2017 pan-Asian hit “Along With the Gods” and its 2018 sequel. Already this year, Lotte’s March releases, “Innocent Witness” and “A Resistance” (the latter made with $880,000 or KRW1 billion), have both passed their break-even points.
Lotte, like CJ, is also a major player in Vietnam, where “Hon Papa Da Con Gai,” is the Vietnamese-language remake of Korean movie “Daddy You, Daughter Me,” was a hit last year.
“The overseas market is not an option any more, it’s a necessity,” says a source at Lotte who wished to remain anonymous. “While the number of releases and general production costs of Korean films constantly rises, the box office volume is at a standstill. Getting to a break-even point will become more difficult in future.”
Next Entertainment World, which has had success in the last few year with blockbusters such as “Psychokinesis,” “The Believer,” “The Great Battle” and “Swing Kids,” saw a downturn in 2018 and is downsizing in 2019. Its eight-film lineup is filled with films in the low- to mid-size budgets ranging from $2.65 million (KRW3 billion) to $7.1 million (KRW8 billion).
Even if 2018 hadn’t been such a disappointment for the big bets, other forces are in play.
Production costs have leaped by 150% since July 2018, according to one source following implementation of a 52-hour limit on working weeks. That is making production schedules slower and pushing up budgets.
Another factor is competition with the streaming companies for content and key talents. “Since Netflix’s appearance, the border between TV or web series and films has been blurred,” says Kim Seong-hun, the director of the Netflix original series “Kingdom,” which has already been greenlighted for a second season. “The young generation has started growing diverse preferences and tastes.” That speaks to studios avoiding putting all their eggs in the blockbuster basket.
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