AFM: CEO of South Korea's Megabox Talks Netflix Partnership, Creating the Next 'Parasite'

Megabox CEO Kim Jin Sun
Courtesy of Megabox Plus M

Kim Jin-sun, whose Megabox controls 20 percent of South Korean movie screens, explains how he courted Netflix to release David Fincher's 'Mank' and George Clooney's 'The Midnight Sky' at his multiplexes, and how his country's exhibition sector is charting a recovery through the pandemic. 

Kim Jin-sun, CEO of South Korean film studio and exhibitor Megabox Plus M, is the driving force behind a partnership that would have been unthinkable just a few years ago: He has arranged for his company, which controls 20 percent of South Korea's movie screens, to become an exclusive theatrical release partner for Netflix.

As recently as 2017, when Netflix wrote South Korea's leading auteur Bong Joon-ho a blank check to produce his big-budget action film Okja, South Korea's largest cinema chains were united in their resistance to the U.S. streaming interloper. Netflix had originally expected to release Bong's film both in local theaters and on its service, but multiplex giants CJ CGV, Lotte and Megabox refused to screen Okja because the streamer insisted on a day and date release and wouldn't abide by local windowing precedents.

Looking back, Kim says he always wanted to screen Okja, despite Netflix's rule-breaking, knowing that the streaming revolution was inevitable and windows would one day crumble. In 2018, not long after the episode, Kim flew to Netflix HQ in Los Gatos, California to discuss how his company might someday align with the streaming giant.

The long-gestating relationship finally yielded results on Oct. 7 with the theatrical release of Aaron Sorkin's Netflix-backed awards contender The Trial of the Chicago 7, which Megabox opened on over 100 South Korean screens (despite the film releasing simultaneously in the homes of South Korean Netflix subscribers). The film has grossed $32,000 to date, despite a steep downturn in Korea's exhibition sector due to the pandemic. Megabox has since lined up a whole pipeline of high-profile Netflix product for its cinemas in the weeks and months ahead, including sizable releases for Ron Howard's Hillbilly Elegy, David Fincher's Mank, Ryan Murphy's The Prom and George Clooney's The Midnight Sky.

Kim began his career in 2000 with a four-year stint as a distribution executive at Sony Pictures Korea, followed by a switch to local exhibitor Cinus, a branch of the media conglomerate Joongang Group. In 2011, Megabox merged with Cinus, and Kim rose to the role of CEO at the combined entity.

Cognizant of the future challenges pure distributors and exhibitors would face, Kim launched a production arm within Megabox in 2016, expanding the company into a full-fledged content creator. The studio's output has included Lee Joon-ik's prestige dramas Dongju: The Portrait of A Poet (2015) and Anarchist from Colony (2017), as well as surprise commercial hits like The Outlaws (2017) and Little Forest (2018). The studio's forthcoming slate includes a raft of high-profile commercial vehicles, such as Lee Won-tae's political thriller The Devil's Deal, Yim Soon-rye's Afghanistan-set hostage thriller The Point Men and the heartwarming soccer film Dream, from Lee Byeong-heon (Extreme Job).

With its content output growing, Megabox launched its own international sales division in October. The new sales team will be meeting with buyers throughout the ongoing American Film Market.

Ahead of the market, The Hollywood Reporter spoke with Kim about how he convinced Netflix to let him release their films on the big screen, how the Korean theatrical market is faring amid the pandemic and why he believes theaters and streamers needn't be natural foes.

What made you decide that that Megabox should handle its own international sales?

Megabox started financing and producing its own Korean films four years ago. We've been looking to expand into the international sales area for our own content since then. Within the Joongang Group, of which we are a part, there also is the broadcaster JTBC and JTBC Studio, which is a K-drama production company. So there is a lot of content being created within the group now, and much of this content has international appeal. With the recent example of Parasite in mind, we feel that Korean entertainment should not be restricted to the domestic audience, but should really look outwards into the international market. If you look at our upcoming film lineup, we have chosen projects that will have international appeal. So we felt the time was right to create that opportunity for ourselves.

After Parasite's amazing commercial and Oscars successes, there was a lot of talk about whether we would see a wave of Korean films getting better distribution opportunities in North America and Europe. How has that played out?

Well, it hasn't been an ordinary year since the Oscars, because of COVID-19. So it's somewhat difficult to say. But as I mentioned, we are looking to build on the interest Parasite has generated in Korean content. We talk to North American distributors, we do feel that their interest in Korean cinema has increased greatly. If you look at our upcoming slate, some of actors we are working with were actually in Parasite. We're also working with other actors and directors who may not be well known in North America yet, but who are renowned here and within other Asian territories. So we're very confident that these other talents can build international appeal. Our focus is to put together a strong lineup that we can put through this new channel that has opened up. We're working on creating another Parasite at Megabox.

How did your partnership at Netflix came about?

The big industry issues in Korea are the same as in the U.S. All of the exhibition companies are very concerned about protecting and maintaining the theatrical window. But for me, I have come to believe that we are living in an era when that no longer holds meaning — it's no longer valid. So, two years ago, I went to Netflix myself to have a meeting with them. I suggested that when they have good content that's worth playing in the theater, I would like to distribute it through our chain, setting aside the window issue. I took the initiative to go talk to them, and that began a two-year discussion that led to this partnership.

Back in 2017, Megabox joined the other big South Korean cinema chains in boycotting the theatrical release of Bong Joon-ho's Netflix-backed film Okja, which Netflix intended to stream day-and-date with the theatrical release. So it seems to me that you've had a change of heart. Could you share a little more about what convinced you to embrace the changes that Netflix represents rather than battling them?

To be honest, I actually wanted to release Okja through Megabox even back then, but at that time the influence of OTT platforms such as Netflix in the Korean market was not big enough to force an industry change. The big Korean exhibition businesses all really wanted to protect the theatrical window, so we joined forces to block it. That was the climate then, but I acted on my views shortly after. The consumer behavior and perception of streaming platforms have changed very quickly, so I felt we needed to adapt very quickly. If there's a change in the market, you have to embrace it — you can't fight a structural change like the internet.

As an exhibitor, I believe the focus should be on developing a special screening environment that's incredibly comfortable and that offers an audio-visual experience that is impossible to create in the home. You also need all of the high-quality content you can get, even if it comes from OTT platforms or other unconventional sources, like sporting events or musical performances.

We signed an exclusive deal with Dolby that gives Megabox the exclusive rights to Dolby Cinema technology in Korea for the next five years. We're going to have 10 Dolby Cinema theaters. We believe Dolby Cinema offers the most immersive cinema experience on the market. Rather than just fighting for a window, we're working to pull consumers back into the cinema — by offering the best content available in a very special screening environment.

Was it difficult for you to convince Netflix to let you show their content on the big screen? I ask because Netflix typically tries to promote its business model by keeping all its original content exclusive to its platform — except for when they want to win awards and theatrical releases are required. I'm curious to hear what their initial reaction was to your proposal of showing their stuff on your screens.

To be honest, they weren't blown away by the idea when we first approached them. They weren't going, "wow, thank you, we welcome this with open arms." As you said, clearly it's their strategy to keep their content exclusive for their platform, except for marketing purposes, or some exceptional cases. But over time, we found a way to work together. Just as we are opening up to OTT, I believe they are also looking into expanding into the offline world. This is the next trend. It's similar to what Amazon is doing — after disrupting [brick and mortar retail], they are building physical stores of their own. The same goes for OTT; as they look for ways to expand, they will be crossing over into the offline world as well. They have so much amazing original content — they will be looking for different ways to make the most of it.

South Korea has experienced several waves of COVID-19 infection, but theaters never shut down as fully as they did in places like China and North America (although the China market has since come roaring back). What's the state of the South Korean exhibition business now?

Well, just like in North America and multiplex businesses elsewhere, we've taken a big hit. Our revenue is barely 20 percent of what it was at the same time last year. We are lucky that our multiplexes are open now and we have put a lot of energy and resources into making sure our customers remain safe. But still, it's a very tough environment. Many of the best films, from Hollywood and Korea, are pushing their release dates back until later. And there aren't that many customers willing to come back to cinemas yet. So it's a huge problem, and we're looking for creative ways to survive.

As you mentioned, nearly all major Hollywood releases have been delayed deep into 2021. As a company that's vertically integrated — exhibition, distribution, production and film sales — how are some of these other areas of your business faring in Hollywood's absence? On the one hand, you don't have bankable Hollywood blockbusters to show in your cinemas, but your Korean titles also don't have to contend with Hollywood competition when you release them at home, or when you sell them overseas to other Asian markets where Korean filmmaking is very popular.

Well, the nature of our market is that it usually consists of two halves — Hollywood film and Korean film — and they each usually take around 50 percent. Just because one half disappears, it doesn't mean the other 50 percent will suddenly grow to 70 percent or 80 percent. It actually has shrunk to something like 30 percent, because we have less good content to pull people back into the cinemas and remind them that it's safe to come back into the theater. As a result, we've had more Korean films pushing back their release dates. The market can only thrive when there is healthy, positive competition between Korean and Hollywood films.

So, we have this void from all of the missing Hollywood films. What we're trying to do is fill it with other content. The Netflix deal is one example. But as I mentioned, we're also screening things like sporting events and classical music concerts. None of this will be nearly enough to fill the gap left by Hollywood, but we have to try. It's a bad situation though, and to be frank, it's not something you can overcome with just a shift in strategy.

Can you share a little more about your attempts at screening alternative content in your theaters, like sports and music? Do you feel that these categories have the potential to actually grow into a sizable part of the business?

Since 2013, Megabox theaters have been live-streaming the Vienna Philharmonic's New Year concert. We were the first to do something like that, and it's been a sell-out show every year. It's significant because the tickets cost five times the price of a normal movie ticket. We've expanded to include opera, summer concerts, the Salzburg Music Festival, and so on. They all have a solid fan base and sell very well. Megabox is well known for this among classical music fans. We also are popular for screening what's called "live viewing" of Japanese anime, which are events where the characters from Japanese animations appear to sing and perform. These occasions are extremely popular among anime fans.

With the classical music content, it's mostly an older demographic, of course. And with the anime, it's mostly a much younger group. But there are very large numbers of classical music fans and anime people in Korea. So we do believe there is a much bigger market opportunity by developing content and events that target various interest groups — and this is something we are pursuing. As I said, this business is now all about creating a special experience in the cinema.

So, the one major theatrical film market in the world that's almost totally recovered and is operating at a really high level is China. Of course, Korean content has had problems in China going back to 2016, when China banned Korean film releases in retaliation to Seoul's decision to install the U.S.-made THAAD missile system near China's borders. I don't think anyone expected that the ban would last four years though. Now that you're getting into international sales, I would assume your company's looking at that relationship even more closely — especially since China's box office is booming again. Do you see any signs that China might allow Korean content into its market again? 

As you mentioned, we didn't expect this ban and the subsequent effects to last so long. But the popularity of Korean content in China and throughout Asia is still very valid and very present. We would hope that very soon this ban will be lifted and things will be business as usual. We are looking forward to that and keeping our hopes up. For example, a lot of the actors throughout our current slate are very popular and well known in China. So our focus is still there, but we're just waiting for business to go back to normal.

How is your production pipeline moving along? How much of your production has been slowed by the pandemic? 

We were shooting an action film called Bogota in Colombia when the pandemic began, and that has been pushed back by a year. Another one of our projects, The Point Man, was actually able to finish shooting inside Jordan during the pandemic. We had the help of the Jordanian government, who proactively assisted us. I'm personally very grateful to the director, crew, actors, and government partners who were willing to work together to achieve this during such a difficult time. We've wrapped the international shoot and are preparing to release The Point Man next year.

And production within South Korea?

Korea must've been the only country where production never really stopped. There have been financial issues involved in the added expense of shooting, because of all of the safety protocols on set. But other than that, it's business as usual. People are shooting and everyone is being very safe and careful. We will have plenty of great films to release once this hard moment has passed.