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Thursday, December 6, 2012

Saving Korean cinema... and even Chaebolplex

Evolution doesn’t teach us that only the fittest survive, but that even the strongest can’t survive when diversity is threatened, and that inbreeding is by no means a way out of extinction.

Last September, I stated my worries about cultural content diversity in Korea, particularly in a movie / broadcasting ecosystem dominated by chaebols ("Korean culture or Hallyu, Cultural contents or discontents"). And this morning, Korea JoongAng Daily published a focus on how 'Conglomerates direct Korea's film industry', which ended in similar calls for quotas supporting independent movies.

Data from the Korean Film Council (KOFIC) confirm the trend, the Korean market has become an oligopoly that all but banned independent movies from their multiplexes:
  • In September 2012, the Big 4 claimed 93.1% of the distribution: 28.3% for Showbox Mediaplex (Orion Corporation), 24.2% for CJ EM, 21.0% for Next Entertainment World (the Twilight saga), and 19.6% for Lotte Entertainment
  • Between 2008 and 2011, the top 3 CGV (CJ EM), Lotte Cinema, and Megabox (Jcontentree - JoongAng Group) raised their share of screenings from 62.2% to 86.7%. 
  • 2 years ago, multiplexes devoted between 6.5 and 9% of their screenings to indie movies, and now they don't let them even reach 2% (of course never on prime time or prime locations):

Even KIM Ki-duk's award winning "Pieta" didn't get the exposure it deserved in multiplexes, in spite of excellent occupancy rates. And the victims are not only local indie productions: even international critic's darlings can’t make it there.

Yes, 2012 is a record year for Korean movies, and for the first time, the 100 M views barrier has been smashed. And of course the winners are well marketed, deja-vu blockbusters: 'The Thieves' (Showbox), 'Masquerade' (CJ EM), and 'A Werewolf Boy' (CJ EM), respectively a Gangnam Style 'Ocean's Eleven', a Joseon-times 'Dave', and a more elaborate 'Nell'-'Wolf' bibim. Needless to say, the government is not considering any regulation to tame what I call "chaebolplexes": the "Pieta Law" mentioned in the article sounds like charity for art-house theaters, and absolution for big complexes.

The big fishes think they're protecting themselves. As if an indie success could threaten them, or alter the overpowering image they project to their audiences. I'm using the plural, because these guys target not only movie goers, but also the developers who consider a multiplex to sex up their latest project (build a multiplex and they will come - Who? Why, the S.P.A.s and family restaurants those investors couldn't convince to sign for their mall, of course).

Make no mistake: the recent boom in multiplexes is not just about conglomerates claiming the lion's share of Korean cinema after noticing the first national blockbusters at the turn of the millenium - you're in Korea, it's the real estate, stupid!

And just like with coffee franchises*, you don't always consider supply & demand issues before opening shop. Except the entry ticket is much higher, and operators have to know a thing or two about yield management. And they'd better know where they're going when they multiply the number of big screens at the very moment movies get available anywhere anywhen anytime.

At the "hardware" level, they want to make the moviegoer's experience special: even your latest home entertainment system can't propose you a full "4D theater" experience, and even your comfiest la-z-boy can't beat the new "lounge" reclining seats (better than first class travel, twice the normal fee). But Starbucks learned the hard way that offering free wifi everywhere didn't mean anything if they forgot their core business: offering good coffee.
Korean operators are the only ones in the World who seem to believe the multiplex concept can survive without content diversity. It's exactly like operating a hypermarket and referencing only 4-5 items: that's not only bad business and terrible risk management, but also the very negation of your customer and your own future. You can't at the same build more theaters and reject diversity, get viewers addicted to blockbusters and expect high occupancy rates in the future. You think you're driving generations to your theaters, but you're killing the golden goose. You think you're building a market, but you're milking it at all levels without any vision whatsoever. And if you think you can guarantee diversity all by yourself, even by betting on your closed circle of fellow majors, you should know it simply doesn't work, particularly not in this country.
The inability to operate even partially open systems is a key factor of failure for Korean chaebols. Look how SK Telecom lost its global leadership in innovation in the early naughties when it sticked to a doomed ambition of controling the whole value chain instead of evolving and nurturing a more open and sustainable ecosystem. Look how Samsung lags behind in soft power and value aggregation beyond in-house solutions. Look how the Korean government struggled when it came to bringing together conglomerates and small players in the innovation process that could guarantee Korea some competitivity in the future. Look at those innovative start-ups wilt as soon as they're absorbed by organizations unfit for the new millenium. And look at those absurd award nights, when, every year, each major TV channel distributes glitzy prizes among its own drama shows in a parody of competition.

So yes, regulations are needed, and yes, truly independent movies (i.e. not from your usual masqueraded subsidiary or outsourced slave) must be given fair chances in multiplexes, including on prime time and in prime locations. Just like broadcasters must nurture the indie ecosystem. It will spur creativity and competitivity across the whole industry, help it source new talents, reach new viewers, and anticipate evolutions. Majors cannot achieve sustainability and international competitivity without it.

But the real change must also come from the chaebol themselves, and I'm sure that, in each of their top strategy teams, you can find at least one person who's perfectly aware of the fact that they can't postpone the cultural revolution anymore.

The first one to open up will be the true leader.

Seoul Village 2012
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* see "Brews and bruises" followed by "500 m, 80%, 100% urban crappuccino"

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