Movie theaters collapsing due to the OTT craze, cannot be saved through ‘holdback’?

The film industry turned upside down after the COVID-19 pandemic, with an average holdback of ‘3 months’
“Audiences have already turned their backs” Questioning the effectiveness of institutionalizing holdbacks
Both production companies and consumers have changed, as multiplexes seek ‘new avenues’

As the multiplex industry faces a downturn following the COVID-19 pandemic, industry debate over the ‘holdback’ period during which movies move from theaters to OTT is intensifying. According to the Movie Theater Ticket Information Network (KOBIS), 24 of the top 37 general Korean movies released last year were confirmed to have been released on OTT in an average of 3 months. The holdback period is getting shorter and the central axis of movie consumption is shifting in earnest.

Go to OTT in 3 months, shorten holdback period

According to the Movie Theater Ticket Information Network (KOBIS), the total number of Korean films released last year was 664, and the number of general Korean films that attracted more than 100,000 audiences was 41 (37 excluding 4 animation films). Among these, there are currently 24 works available for ‘unlimited streaming’ on OTT (individual payment content not included). The average time taken for these works to be released on OTT was only 98 days based on the date of theatrical release.

Among the movies that attracted more than 1 million viewers, the one that was released on OTT in the shortest period of time was ‘Unofficial Operation’. ‘Unofficial Operation’, which was released on August 2nd last year (all the following are based on the month and day of last year), was released on Coupang Play for 3 days starting on September 15th. It has been 44 days since it was released in theaters. In the case of movies with 100,000 to 1 million viewers, △Count (43 days), △Switch (48 days), △Confidential (50 days), △Brave Citizen (65 days), and △Puppy (79 days) are on the OTT streaming list within 3 months. was named in There are 8 movies that took more than 100 days to be released on OTT, including Crime City 3 (133 days), Smuggling (132 days), Concrete Utopia (118 days), and Negotiation (105 days), and most of them were box office hits. It belonged.

However, it cannot be said that box office hits necessarily have a long holdback period. ‘Hansan: Emergence of the Dragon’ will be released on August 29 (34th) after being released on July 27, 2022, and ‘Emergency Declaration’ will be released on September 27 (56th) after being released on August 3, 2022. was revealed in In 2021, when the COVID-19 pandemic was at its peak, movies produced for theatrical release went directly to OTT. Representative examples include △Time to Hunt, △Victory Lake, and △Night in Paradise. In the industry, it is believed that ‘OTT release within 3 months of theatrical release’ has become a kind of new normal in the market (a new standard that is emerging as times change).

Is mandatory holdback useless? sinking multiplex

The shorter the holdback period, the more audiences prefer OTT services. This is because the perception that ‘you can soon watch something on OTT without having to go to the theater’ is spreading among audiences, leading to a sharp decline in the demand for theater visits. This is also the reason why holdback compliance is considered one of the few ways out of the multiplex industry, which is facing a recession. As consumers and production companies turn their backs on movie theaters one after another, there is a high possibility that multiplexes will be left out of the market if even the ‘safety device’ called holdback disappears.

The multiplex industry has consistently insisted on ‘mandatory holdback’. The request is to ensure a minimum level of competitiveness by specifying holdback obligations in the system. The Ministry of Culture, Sports and Tourism, which accepted this request, announced the ‘Video Industry Leap Forward Strategy’ in November last year, which mandates holdback compliance for films invested in mother fund (film account). However, at the time, the industry had doubts about the effectiveness of the plan. As it is a support measure limited to mother-of-fund works, it has little effect on stimulating the market, and in fact, the government’s role in the holdback agreement process of private companies is bound to be limited.

Meanwhile, some have pointed out that mandatory holdbacks may actually encourage ‘illegal consumption’ of content. For consumers, OTT is a ‘cost-effective’ service that allows them to watch unlimited content of their choice for the price of a movie ticket. With ticket prices steadily increasing, this means that movie theaters are no longer an ‘attractive consumer destination’ where you can easily kill time. Now that consumers’ wallets are closed, there is a risk that unreasonable holdbacks will actually encourage demand for illegal free content. This means that if the OTT release period is delayed, there may be an increase in consumers accessing content on illegal streaming sites such as ‘Nunu TV’ rather than visiting movie theaters.

The upheaval in the film industry can no longer be reversed

As the movie market faces a period of upheaval, the cracks in the multiplex industry are gradually deepening. As of January to September last year, domestic movie theater sales were 956.5 billion won, only 70% of the average for the same period in 2017 to 2019 before the pandemic. The cumulative number of viewers plummeted by 56.9%. Among the films released domestically last year, about 90% did not even exceed the break-even point. Major multiplex operators such as CJ CGV and Lotte Cultureworks were pushed to the brink due to their worsening financial situation.

In the industry, there is growing support for the prediction that the multiplex industry will lose its role as the ‘first gateway’ to movie releases in the future. The analysis is that the traditional structure of producing a movie, releasing it for the first time in a theater, and sharing profits between the production company and the theater will collapse. Some even say that the content market will never return to its previous form. This means that the multiplex industry must now find a new ‘way to survive’.

The blow of the COVID-19 pandemic has brought about huge changes in the film industry. Production companies no longer insist on releasing movies in theaters, and consumers watch movies on numerous channels other than theaters. Will the dark clouds that have descended on the multiplex industry truly be a transitional period to welcome a new morning, or a disaster that will bring about a storm? The key is the market’s response.