Members of the Korean Film Industry Emergency Response Coalition hold a press conference at the People's Solidarity for Participatory Democracy in Jongno District, Seoul, Thursday, addressing the complaint filed with the Fair Trade Commission over revenue calculations and sharings by cinemas.
Major South Korean film organizations have lodged a complaint with the Fair Trade Commission against the country's top three multiplex chains — CGV, Lotte Cinema and Megabox.
The complaint alleges that these chains have not been transparent in disclosing the way they calculate their revenue and have reduced their share of the revenue by offering excessive, unapproved ticket discounts.
The Korean Film Industry Emergency Response Coalition (tentative name) held a press conference Thursday to announce its actions.
It urged the cinema chains to remove the "hidden costs" from ticket prices and to disclose their revenue calculations transparently.
The coalition, which includes the Producers Guild of Korea (PGK) and 15 other film-related organizations, voiced its concerns.
Moviegoers fill a bustling multiplex cinema in Seoul on Sunday. Yonhap
Ticket prices up, but share of revenue down
The core issue highlighted by the film coalition is the average ticket price per audience member. Despite cinemas raising ticket prices by 1,000 won ($0.8) three times since 2020, the average ticket price per person has actually decreased.
According to the coalition, the average ticket price for Korean films this year is 9,628 won, down 421 won from the 2022 average of 10,049 won. The coalition attributes this decrease to the cinema industry's indiscriminate discounting practices.
This reduction in the average ticket price has consequently reduced the share of the revenue for domestic distributors and production companies.
Typically, cinemas split ticket revenue 50-50 with distributors and producers. In 2022, distributors and producers received approximately 5,025 won per ticket; this year, they are receiving about 4,814 won.
Lee Ha-young, an executive committee member of the PGK, said, "Cinemas excessively raised ticket prices to recover losses from the COVID-19 pandemic. When attendance dropped, they resorted to excessive discounting, reducing the average ticket price. This has diminished profitability for distributors and producers, leading to a decline in film investments and a slump in the film industry."
Members of civic groups hold a press conference at CGV headquarters in Yongsan District, Seoul, June 26, announcing their complaint to the Fair Trade Commission against CGV, Lotte Cinema, and Megabox for alleged ticket price collusion and profiteering. Yonhap
Lack of transparency in discounts offered
The Film Coalition criticized cinemas for not disclosing detailed information about the discounts they offer, leading to a lack of transparency regarding how revenue is distributed.
Lawyer Kim Jae-hee, present at the press conference, pointed out, "According to the Standard Film Exhibition Basic Agreement, cinemas are obligated to submit ticket sales revenue based on audience numbers in writing to distributors and producers within seven days of a film's screening. However, cinemas have been providing arbitrary revenue reports without detailed data on discounts."
Kim added that the three major multiplex chains, which control over 90 percent of the market, are "exploiting their dominant position to gain unfair profits," violating the Fair Trade Act.
The Film Coalition said it would escalate its actions against the multiplex chains following its complaint to the FTC. It pledged to address the chronic issues plaguing the Korean film industry, such as the screen quota system and the holdback period.
The screen quota system limits the number of screens and showings allocated to blockbuster films like "The Roundup: Punishment."
The holdback period defines the minimum duration for a film's theatrical release. The coalition, currently an informal group, will hold its inaugural general meeting this month to officially establish itself.
In response, the Korean Association of Exhibition Industry, representing the three multiplex chains, issued a statement asserting that cinemas provide detailed revenue breakdowns to distributors according to their contracts.
"We can cooperate further if additional details are requested, provided it does not conflict with other contractual obligations or business operations," it said.
This article from the Hankook Ilbo, sister publication of The Korea Times, is translated by generative AI and edited by The Korea Times.