[Culture Op-Ed] Is Screen Monopoly Distribution the Main Culprit Behind the Decline of Korean Cinema?

This is clearly still an ongoing issue. In some sense, it may even be the hottest potato in popular culture right now. A quick look at the most recent cases makes the situation easy to grasp.

On December 1, the civic group Seomin Livelihood Countermeasures Committee filed a complaint with the Seoul Central District Prosecutors’ Office against Walt Disney Company Korea, the investor-distributor of the film *Frozen 2*, alleging a violation of the antitrust law (the Monopoly Regulation and Fair Trade Act). On November 22, the Emergency Committee of Filmmakers for Securing Film Diversity and Resolving Monopoly also held an emergency press conference, saying, “The promotion of film diversity and the resolution of monopoly must be addressed through law and policy, because this is not simply a problem involving the distributor and theaters of one particular film,” and called for regulation and support.

Amid this continuing backlash, revisions to the law have also been steadily moving forward. The starting point was the proposed amendment to the Promotion of Motion Pictures and Video Products Act (hereafter the “Motion Picture Act”), introduced separately in October 2016 by Ahn Cheol-soo of the People’s Party and Doh Jong-hwan of the Democratic Party. The bill included a ban on large corporations engaging simultaneously in distribution and exhibition, the designation of dedicated art/independent film screens within multiplexes, and provisions banning screen monopoly as well. Then, in November 2017, Cho Seung-rae of the Democratic Party proposed a bill preventing directly operated theaters of large conglomerates from screening the same film on more than 40% of their screens.

Then, on April 15, 2019, Woo Sang-ho of the Democratic Party went further and formally introduced an amendment to the Motion Picture Act containing more concrete “screen cap” provisions. It included a limit under which, during prime time (1 p.m. to 11 p.m.), the screening ratio of the same film could not exceed 50% of all screens. Gaining momentum from this, on April 22 of the same month, Minister of Culture, Sports and Tourism Park Yang-woo personally stressed the need for a “screen cap,” and by October 14 the government decided to pursue an amendment to the Motion Picture Act centered on introducing such a cap as part of the “Korean Film Industry Development Plan.”

In other words, this is the closest that regulation under the name of a “screen cap” has come since the 2006 situation surrounding *The Host*, when the screen monopoly controversy first erupted. But is this trend really proceeding on the basis of sound judgment?

The current distribution model is simply the result of thoroughly adapting to Korean popular preferences

Among the world’s top 10 film markets (South Korea ranked 5th in 2018), only France (6th) and Germany (8th) have actually adopted a meaningful concept resembling a “screen cap.” In France, a strong screen cap is applied that limits multiplex screenings of a specific film to 25% of a theater’s total screens (up to a maximum of four). As a result, the release scale of major blockbusters in France is generally around 900 screens, or about 15% of all screens nationwide. Furthermore, if a theater is caught allowing a particular film to exceed one-third of its total daily screenings, that theater is suspended from business for 60 days. If caught three times or more, its exhibition license itself is revoked.

Germany is even stricter. In Germany, theaters are not allowed to operate in the morning and daytime to begin with. Theaters that receive permission to screen films before 4 p.m. may show only animation or educational films for children during those hours. And even during the officially designated screening hours of 4 p.m. to 11 p.m., a specific film may occupy only up to 40% of total screens. In some respects, this is even more shocking than the screen cap itself, since it effectively prohibits the screening of ordinary commercial films from the morning until 4 p.m.

But the situation in the other countries is completely different. In the United States, the largest film market, no such legal system exists at all. Even so, no matter how enormous a blockbuster may be, the proportion of screenings is voluntarily kept to around 30% to 40% at most. Japan is the same. There is no relevant regulatory law. Yet the screening share of a specific film is generally kept within 25%. Instead, in the case of a major hit, it is not uncommon for the film to remain in theaters for more than a year.

In fact, France and Germany are not the most important examples here. Even if one expands the comparison to the world’s top 20 film markets, those two still stand out as exceptional cases where the concept of a screen cap is unusually strong. They are outliers. What matters more is looking outward to places like the United States and Japan. Why is it that in those countries the market is evenly and diversely dispersed without any need to introduce a screen cap? Put differently, why is market concentration so severe in Korea that it has gone so far as to push for the introduction of a screen cap, something not even discussed in the United States or Japan?

In short, the Korean film market has always been highly concentrated. This is not something new, nor did it begin with *The Host* in 2006, nor did it start in the late 1990s when multiplexes brought large corporate capital into the film market. Strictly speaking, it can be observed as far back as the 1950s. In other words, even before multiplexes, in the era of single-theater releases, the Korean public was already showing the same tendency to flock to particular films at the same time.

Since film industry data began to be systematized in the mid-1990s, there have been ample cases proving this. A representative example is *Shiri*, often said to have marked the beginning of the Korean-style blockbuster in 1999. At the time of its release, *Shiri* opened in 23 theaters nationwide. Since the Korean Theaters Association then had a total of 507 member theaters, its share was only 4.5%. Later, as it became a box-office success, the number of theaters increased, but only to around 70. That was about 14% of the total. By the standards of any country or any proposed amendment, it was nowhere near the target of a screen cap.

And yet *Shiri* ultimately drew 5.82 million viewers nationwide, an astonishing figure amounting to 10.6% of the total annual movie audience in 1999 (based on Seoul audience figures). Converted to the 2018 market scale, that would be roughly 22 million viewers.

In the end, whether distribution was monopolistic or not, market concentration was “going to happen anyway.” Indeed, the same kind of extreme concentration was repeated with *Joint Security Area*, *Friend*, *Silmido*, and *Taegukgi*, and its intensity actually grew stronger over time. Starting with *The Host*, the film that triggered the controversy, distribution methods then changed in response to this market atmosphere. That became the starting point of what is now called the “screen monopoly controversy.”

Is this materialist way of thinking—believing that if you change the “system,” “human nature” will change too—really normal?

Why, then, has the Korean film market been so prone to concentration? There are many views, but fundamentally one must recognize that Korea has an exceptionally strong tendency toward concentration across the entire goods market in virtually every field. This goes without saying even more in the various culture-related industries often described as “fashion-driven industries.”

You can see it just by stepping outside your home right now. The streets are filled with nearly identical long padded coats, or else similarly identical fleece jackets. Of course, it is not just fashion. “10 million films,” seen by one-fifth of the population, unfailingly appear two or three times a year. In 2019, that number rose to five. There is simply no other film market in the world quite like this. In the popular music market too, all kinds of concentration have been a chronic issue for the past 40 years, and the same was true for television ratings. Before web-based media began dispersing audiences, hit Korean TV dramas routinely posted ratings in the 40% to 50% range. In a country of this economic scale, there has, strictly speaking, been no other case of “concentrated taste” quite as extreme as Korea.

Ultimately, this means Korean society exhibits an extreme bandwagon effect. And the background to such an extreme bandwagon effect is usually concentrated in one thing: a collectivist social atmosphere. In a society where everyone is expected to live under the same rules and the same values—shared by all even if not formally codified—even matters of “taste” easily become subject to the bandwagon effect and rush in one direction. That is why the atmosphere is so different from societies such as the United States or Japan, where individualism is much more pronounced in ways of life and cultural taste. It is simply the difference between a market where people choose the films they themselves want to watch and a market imbued with collectivism, where if others are watching something, one feels compelled to watch it too.

In such a collectivist atmosphere, what exactly would a screen cap change? In a cultural sphere that has consistently shown concentration whether distribution was monopolistic or not, what happens after screens are forcibly allocated in an attempt to stop it? We already know the result. There was CGV Movie Collage, introduced from 2004 at flagship branches in Apgujeong and Myeongdong as a dedicated independent film concept after multiplex chain CGV came under various pressures, and then CGV Arthouse, which took up the baton under a new name from 2014. These were screens forcibly assigned to films that would not sell on their own. The result was exactly what everyone would imagine: they sat empty. Before that, the overwhelming majority of people did not even know such venues existed.

In the end, the concentration phenomenon in the film industry is not something to be solved through that sort of materialist thinking. The public are not people who “must go see a movie,” and the film market is not a zero-sum arena in which films merely take slices from one fixed pie. The public already know what films they want to watch. This is no longer the 1970s or 1980s, when people would go to the Jongno intersection with no information and choose a film just by looking at theater marquees. Consumers now carefully review film information on the smartphones in their hands and decide what to watch. But what happens if the theater showing that film becomes less accessible and less convenient because of some “law of distribution”? Nothing changes except that consumers become more inconvenienced. And that inconvenience inevitably leads to market decline.

In short, what produces concentration is the overall atmosphere of Korean society itself, not some lone distribution system shaping the whole world. This is not a matter to which one can simply apply such crude materialist thinking. The current distribution system, commonly described as “monopolistic,” is in fact a method devised to adapt to Korean popular preferences and increase profitability; in some sense, it can even be called a “public-friendly” strategy.

Put differently, unless Korean society as a whole undergoes some major turning point and is transformed into something completely different from what it is now—something deeply individualistic—then whether one imposes a screen cap or even goes so far as to ban screenings outright, the situation will never fundamentally change. What is needed is an idealist mode of thinking. This is all the more true in the field of culture and the arts.

Through so-called monopolistic distribution, the market grew larger and the benefits went to more films

Now let us talk about something slightly different: the “good outcomes that are rarely discussed” produced by the form of distribution called screen monopoly. Whatever else may be said, the Korean public show strong bandwagon effects and concentration, and therefore they are also extremely sensitive to “trends” themselves. Being sensitive to trends does not simply mean everyone follows them; it also means the life cycle of those trends is extremely short.

There are many examples. For instance, the promotional period for most idol groups now lasts only about 3 to 4 weeks. That is because the shelf life of the music they bring back with them on a comeback has become that short. This is on a completely different level from the United States, where songs sometimes stay at No. 1 on the Billboard chart for 5 or 7 consecutive weeks, or Japan, where cultural shelf life is long to begin with. The same is true of TV dramas. Even though Korean broadcasting is not run on a quarter system like in other countries, drama runs have long since been compressed into about a quarter’s length, or at most around 3 months. The same goes, needless to say, for all kinds of fast fashion trends.

The film distribution model commonly labeled monopolistic is an adaptation to this increasingly short circulation cycle of Korean popular culture. In the 2000s, as the Korean film market rapidly expanded, the industry took note of the fact that it took no more than 5 weeks at most for a film to be pushed out of trend circulation. A movie would be distributed on an enormous scale in its opening week, but by the very next week the number of screens would already have dropped to a level that could hardly be called monopolistic. In that way, central distribution would shift to new films every 2 to 3 weeks. This was also an appropriate response to the Korean public’s tendency to converge on “one film” at a given moment.

The result was enormous. Total admissions in the Korean film market rose from 135.17 million in 2004, just before the screen monopoly controversy gained traction, to 216.39 million in 2018. That is growth of about 60%. Of that, admissions for Korean films also increased substantially, from 80.19 million to 110.15 million.

Even more importantly, this ultra-short-term monopolistic distribution actually reduced concentration in the distribution of box-office success and allowed more films to benefit. In 2005, when the Korean Film Council began counting nationwide admissions, there were only 8 films that drew more than 3 million viewers nationwide—the line commonly considered a major hit—and 6 of them were Korean films. By 2018, a total of 21 films had entered that range, 10 of them Korean. If one broadens the scope to the mid-level hit line of 1.5 million viewers, the picture becomes even more dramatic. The number rose from 21 films in 2005 to 39 in 2018, meaning nearly twice as many films were able to secure stable profits.

In the end, a strategy of quickly surging in and out by taking advantage of contemporaneous trends actually moved the market in the direction of broader, more even expansion by giving a wider variety of films the chance to meet audiences.

Of course, this does not mean that diversity of choice in films—the core issue originally raised in the screen monopoly debate—is unimportant. In any field, there is no better way to build a healthy and stable market than to secure a variety of choices. But there is also nothing more foolish and dangerous than insisting that diversity must be secured by artificially intervening in a naturally formed market structure.

And strictly speaking, there are always many “films to watch” at any given moment. If one is dissatisfied with screens being swept clean every 1 or 2 weeks, one can search online right now and find numerous independent and art films such as *The Truth*, *Sorry We Missed You*, *The Two Popes*, and *Moonlit Winter*. If the argument is that such films must be delivered to the multiplex right in front of one’s home and screened at one’s preferred time before one can even be motivated to watch them, then it is worth remembering that even in many major film nations such as the United States, Japan, France, and Germany, arthouses screening independent and art films are usually located far from the busiest districts.

Finally, there is an interesting point. Consider the response of the Emergency Committee of Filmmakers for Securing Film Diversity and Resolving Monopoly to Minister of Culture, Sports and Tourism Park Yang-woo, who is currently pushing for the screen cap. It would be a mistake to assume they expressed active support. On the contrary, the group objected by pointing out that Minister Park had served as an outside director of CJ ENM for more than 5 years, saying that “he cannot represent us.” Why is this happening? Perhaps, in the nature of public market intervention—where the side that gets to “decide” distribution also acquires “power”—they are wary that an unfamiliar outsider may control the power they believe should belong to “their side.”

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Original title: [문화칼럼] 스크린독과점 배급은 한국영화계를 망치는 주범이다?

Author: Mun-won Lee

Date: 2019-12-31

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=11&idx=22235