Industry Report: Focus: Asia & Oceania
Korean film industry cites need for Hollywood money
- To resuscitate the ailing local film industry, it must get into bed with Hollywood to co-finance and co-produce films, industry insiders said in a forum Friday.
From its struggles with online piracy, sharp contraction in overseas distribution and sales, and "a failure to get on board the emerging trend of multimedia convergence," doom and gloom were the words to describe the future of the local film industry during the "Korean Films Going Global" forum at the Korea Chamber of Commerce in Seoul, Friday.
"Unless the Korean film industry begins globalizing through co-financing, co-production, and content sharing with Hollywood, it will continue its course of decline," said Seo Hyeon-dong, team leader of CJ Entertainment's overseas investment and production division.
CJ is the current market leader among all major film studios having captured 27.3 percent of the market share this year from its closest rivals Showbox, Mediaplex, and Lotte Entertainment.
Of the industry's dire situation, Seo added that in order for the local film industry to bounce back "we must come up with content that is accessible to the world - not just among Koreans."
"With the global film industry going digital, restrictions have been brought down and boundaries broken, and the industry has become one market."
Social networking and online content sharing sites such as Facebook and YouTube were mentioned during the conference as important factors in film marketing and promotion in addition to content development.
Seo added, "with the likes of YouTube, Facebook, and the iPhone - where people all over can receive and share content - the ability to seize the opportunity that such outlets can provide has become crucial in the development of ideas as well as for the industry's survival."
On the continuing spread of online piracy, illegal distribution, and a reduction in overseas sales of Korean films this year, Seo said "Adding to the industry's current crisis are paralyzing factors such as online piracy, illegal content distribution, and a contraction in overseas sales of our films."
According to latest industry reports, there's been a two-fold increase in illegal film distribution since 2006 when there were an estimated 36,000 piracy cases reported.
In 2008 alone, the cost of damage from over 67,000 cases was estimated at 710 billion won (S$781 million).
More alarming has been the sharp decline in export sales of local films as foreign distributors have been giving Korean films the cold shoulder.
Compared to the US$76 million (S$102,980,000) worth of film distribution rights sold to overseas markets in 2005, only a fraction of that amount was seen in 2008 with just over $20 million.
This year, it hasn't gotten any better.
Based on reports from the Cannes International Film Festival earlier in May, only a handful of Korean films were sold to overseas distributors at the film market during the event.
Of them, Kim Ji-woon's western, "The Good, The Bad, the Weird," was sold to distributors in France and the U.K., while Kim Ki-duk's "Breath" was sold to the U.S. and the U.K.
They were the only two films foreign distributors purchased.
Adding to the industry's concerns have been recent reports that annual theater attendance from movie-goers have been down since the previous year despite revenues reaching a record high on the back of the success of 3-D fare like "Avatar" and "Alice in Wonderland."
Local cinemas saw a 14.6 percent spike in their total box office take over the same period last year while the number of admissions at multiplexes was down 3.9 percent, according to a recent report by the Korean Film Council.
Seo went on to declare that China's film industry - a country whose industry remains outside of the top 15 countries - would overtake Korea by 2020.
Korea is ranked by market analysts within CJ Entertainment at 11th in the world, behind U.S. at first, Japan at second and the U.K. at third.
"The Chinese film industry is benefiting from a synergy effect due largely to the mass exodus of the Hong Kong film industry's talent pool to mainland China," Seo said.
"As it looks now, the Chinese film industry will crack the top 10 before Korea does, by the year 2020."
To prevent the continuing decline of the Korean film industry Seo added, "our industry must come up with 'global films' - films that can be applicable to a world audience. In order for this to be possible, we must link up with Hollywood studios to co-produce and co-finance films."
Roy Lee, co-founder and producer at Vertigo Entertainment said during his keynote address that the feeling is mutual for Hollywood film studios as they too are seeking co-financing opportunities.
He said major studios in Hollywood are also keen on the prospects of co-financing with studios from other countries to lessen their financial burden.
Lee added that this decision to reduce output has seen a steep contraction in film productions by American studios because of the dramatic increase in marketing costs and "the collapse of the DVD market."
"In the past, the studios financed their films with the belief that they could count on a certain amount of revenue generated by the DVD release," Lee said.
"At one point, the revenues generated by a film on DVD would match or even exceed the amount of revenue generated by the theatrical release. Now that the studios cannot rely on the revenue stream of the DVD release, it has caused the studios to reduce the amount of money they would typically use to fund the film production."
Lee is credited for ushering in the Asian remake boom that started with the American version of the Japanese horror film, "The Ring" in 2002.
Lee Joo-ick, CEO of Boram Entertainment also spoke of the non-existent home entertainment market in Korea contributing to the decline of the film industry.
He stated Korea had a "less than spectacular DVD and home entertainment market to begin with," and added "in Japan, DVD sales have not dwindled as there is strong demand in content for the home entertainment industry. Japanese investors can recoup costs through ancillary revenue generated by DVD sales."
"This is in contrast to the Korean film industry where its studios have to rely on revenue made solely from its theatrical run and this in turn causes studios to be cautious of taking risks with new and innovative content."