Korean film industry seeing declines

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BUSAN, South Korea -- "A crisis like a great depression," is how Korean Film Council chairman Kang Han-sub described the local industry at a news conference over the weekend at the 13th Pusan International Film Festival. Fewer buyers attending this year's Asian Film Market, coupled with slower market sales than in previous years, seems to prove his point.

"I hate to use the words 'Korean wave,' " said Michelle Son, managing director of M-Line Distribution, who has visited Pusan the past few years as an international sales representative with Show East. "But I think the trend for Korean cinema that was once there is increasingly fading. That has a huge effect on Asian buyers, whose film selection depends largely on hallyu (Korean wave) stars."

Numbers to date in 2008 show local market share at the Korean boxoffice has dropped to 41.4%, down from 50.8% in 2007 after peaking at a whopping 63.8% in 2006. Signs of industry ill health were visible even at the 2006 peak as only 22 out of the 108 films released that year broke even. Overproduction and problems in Korea's major-dominated distribution system gave mid-budget films only a small window of opportunity at the boxoffice.

Another survey by KOFIC shows that productions of commercial Korean films declined from more than 100 in 2006 to 30-35 this year. The boxoffice from January-August in the Seoul area also reveals a sharp decline in the market share for Korean films, from 58.1% in 2006 to 36.4%.

One of the major reasons the industry has fallen into the red is the evaporation of ancillary markets. Access to illegal downloading is readily available through many Korean file-sharing services online; about 47% of Koreans watch movies through file-sharing services, according to a 2007 KOFIC survey, downloading an average of 54 movies a year. In a country where more than 80% of households have access to the Internet, it has forced local films to depend too much on theatrical revenue for profits.

"The government simply hasn't done anything to regulate the mess," said Ellen Kim, a producer and director of international business at Bom Film Prods. Government investment in and promotion of the IT sector has taken precedence over and caused harm to its guardianship of the cultural sector, she argued. Stricter controls and development of such new-media services as VOD and mobile viewing would do much to sustain a future for Korean cinema.

Along with tighter enforcement, industry figures seem to agree that facilitating foreign productions and joint ventures is the most viable path. PIFF has put co-productions in the spotlight this year in its numerous forums, with an emphasis also on strategies for drawing foreign productions to Korea.

Kim, speaking for an industry facing high levels of unemployment, seems to agree with PIFF. "The government must encourage incoming foreign productions, location incentives and postproduction services so the industry can survive," she said.

Overall, local film experts explain that the hype over Korean films in the past few years led to too much money being spent on films hoping to cash in on passing industry trends and celebrity drawing power over content. Premiums for star leads and rising P&A budgets meant delivery costs have grown disproportionately to boxoffice revenue. A slew of big-budget boxoffice failures in recent years have driven away investors.

"Most investments had been made based on superficial criteria and produced in haste for quick returns," said Lee Sang-yong, Pusan's programmer of Korean films. "In a way, the crisis now is a healthy transition for Korean cinema, because it led producers and investors to be more realistic and meticulous about their decisions."

Kim Jin-hae, a film professor at Kyungsung University, agreed, saying that the Korean film industry needs "a major process of filtering" to produce better quality. This means hard times for directors competing for fewer funds.

"It's definitely much harder to debut now as a director than it was three or four years ago," said Jang Hun, the helmer of "Rough Cut," an Asian Film Market title. "Even if you have a great script, finding investors is another issue. That's why producers and directors are going berserk to find celebrities that will help the film's promotion."

On the upside, 2008 has shown an increase in exports after two years of decline. The biggest boost was to North America, where figures increased from $154,000 in first-half 2007 to $2.8 million for the same period this year, totaling 28% of total exports. Sales to Asia were up 18% to $4.9 million, representing the biggest market for Korean films; major market Japan is up 16% to $2.6 million.
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