South Korea 2015 in Review: MERS Outbreak Hits Box Office, China and Hollywood Deals Boom

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South Koreans wearing masks amid the MERS epidemic.

The Busan film festival had a showdown with city officials, and the country saw its first virtual reality movie.

The year 2015 was an eventful one for South Korea, full of surprises, including a string of box-office hits and cross-border deals.

The biggest headlines, though, came from an outbreak of Middle Eastern Respiratory Syndrome (MERS), the largest outside the region, which drove audiences from theaters and other big public areas, hitting Korean exhibitors hard.

When authorities gave the all-clear, however, Korean fans came back in droves, helping to drive some of the biggest hits in local box-office history and filling the coffers of Hollywood imports as well. 

The South Korean market also attracted renewed international attention this year, with China and Hollywood eyeing new Seoul-focused investments. But the Busan International Film Festival, Asia's largest and most prestigious film festival, faced off with local authorities, which threatened its artistic freedom.

Here is THR's look at key industry news and developments that shaped the year in South Korea.

MERS Outbreak Hits Hard

Local retail and tourism faltered when the MERS virus hit South Korea in late May, claiming 38 lives and marking the largest outbreak of the lethal disease outside Saudi Arabia.

Cinemas began emptying out, with the attendance rate dropping about 20 percent each weekend for three straight weeks, hitting an all-time low of 1.55 million for the weekend of June 5-7. This affected the season's lineup and marketing plans, with several local titles postponing release dates and many others canceling promotional events as people avoided crowded places.

Among the Hollywood titles whose box office benefited from the postponement of local releases were Jurassic World and Terminator: Genisys.

The scare across Asia was so big that organizers of the Shanghai International Film Festival, still haunted by the high death tolls of the SARS epidemic a few years ago, virtually disinvited Korean stars from attending. Korean moviegoers nevertheless started heading back to local theaters to watch summer blockbusters.

Local Titles Reign

In July and August, two homegrown films enjoyed back-to-back successes to rank among the top five films of all time in Korean box-office history.

Assassination, a Showbox/Mediaplex title, recorded over $83.05 million, according to the Korean Film Council's KOBIS database. Its box-office success was also significant in that it reaped revenue in spite of local stereotypes against films set during the Japanese colonial era, a sensitive topic for many Koreans.

Veteran, a crime actioner distributed by CJ Entertainment, reaped close to $88.71 million to become the top film of the year. Both films are among a dozen local titles that crossed 10 million admissions, or about a fifth of the entire Korean population.  

Hollywood Tentpoles Also Soar

Despite local titles' domination, South Korea's box-office boom was a tide lifting all boats. Hollywood imports enjoyed the bounty, with three titles making the top 10 of the year before the opening of Star Wars: The Force Awakens.

Foreign films fared quite well in 2015, dominating the charts especially during the first half of the year. Ranking among the top 10 films of the year were Avengers: Age of Ultron in third, with a local gross of nearly $75 million; Mission: Impossible - Rogue Nation ($40.95 million) in seventh; and Jurassic World ($40.32 million) in eighth.

Korea, moreover, was the second-largest overseas market for Avengers 2 after China. The Marvel flick is now one of the top 10 highest-grossing films in Korean cinema history and the only foreign title alongside Avatar to be included in the top rankings. The success of Avengers can be partially attributed to the producers' decision to shoot parts of the film in Seoul.

Korea-Hollywood Deal-Making

Hollywood and the Korean industry got closer in 2015. Top local distributor Showbox/Mediaplex partnered with Blumhouse Productions and Ivanhoe Pictures to jointly invest in, develop and produce Korean-language genre films.

Netflix and Plan B, Brad Pitt's shingle, also made headlines for investing in the Korean film Okja by Snowpiercer helmer Bong Joon Ho. Netflix, moreover, kept local industry observers on alert as it announced plans to launch in Korea in early 2016.

There were also notable cross-border casting decisions in 2015, with Lee Byung-hun appearing in Terminator: Genisys and Lee Joon-gi starring in Resident Evil 6, while Liam Neeson is set to play General MacArthur in the Korean War actioner Operation Chromite.

China Invests More in Korea

Following a landmark government-level co-production deal in 2014, the Korean and Chinese film industries grew even closer in 2015.

China's Huace, which is the second-largest shareholder of top Korean distributor Next Entertainment World, announced a production joint venture for Chinese-language remakes of Korean films in 2015.

Chinese cinema giant Wanda Group became the second-largest investor in Korean VFX firm Dexter Studios via a $10 million investment, created a $180 million film fund with Busan city and forged a deal with local theater brand CJ CGV to launch the 4DX cinema technology in Chinese theaters.

Virtual Reality Becomes Reality

4DX, a theater tech firm offering a multi-sensory experience, including moving chairs and smell-o-vision, has emerged as one of South Korea's hottest exports, with, in addition to China, locations rolling out across Turkey and South Africa in 2015.

Not satisfied with just 4D, Korean cinemas are already rolling out the next phase in big-screen tech, the three-screen panoramic viewing technology ScreenX. 4DX and ScreenX are both viewed as the first steps in bringing virtual reality (VR) to the movies.

The year 2015 saw South Korea's first VR movie, Time Paradox VR, and Samsung Electronics is pushing VR products including Gear VR, a smartphone-compatible headset developed with Oculus, and Project Beyond, a 360-degree omniview camera for shooting 3D VR content.

CJ Entertainment's Himalayas got a special VR showcase during the month of December, inviting moviegoers to watch the CG-heavy mountaineering epic with Gear VR in a ScreenX theater.

Busan Fights for Artistic Freedom

Since launching in 1996, the Busan International Film Festival has grown into Asia's biggest and most prestigious festival — but the Korean event unexpectedly found itself at a crossroads ahead of its 20th anniversary edition in 2016.

Its artistic freedom became the subject of heated debate as local authorities questioned the 2014 screening of a controversial documentary film, The Truth Shall Not Sink With Sewol. Shortly thereafter, the state-supported Korean Film Council virtually halved its annual funding for Busan to roughly $730,720. Cannes Film Festival chief Thierry Fremaux, Venice’s Alberto Barbera and renowned filmmakers including Apichatpong Weerasethakul sent strongly worded statements of support for BIFF amid its censorship struggles.

In spite of the worries, the 20th edition of BIFF in October closed with record attendance for both the festival and the Busan Asian Film Market. Fest organizers also welcomed Korea's iconic veteran actress Kang Soo-yeon as its co-director.

The festival, however, has yet to smooth things out with Busan city. The metropolitan government asked prosecutors on Dec. 11 to investigate sponsorship funds.

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