Big 4 wary of new distributors

Logos of film distribution companies CGV, left, and Lotte

Chinese money flows into film distribution market

By Park Jin-hai

The local film distribution industry has long been in a league of their own with the domination of the Big four distributors ― CJ, Lotte, Showbox and NEW. But the Big Four's domination is poised to face a new challenge as several new comers are jumping into the market.

Earlier this year Yoo Jung-hoon, who has been in charge of Showbox for the past 11 years, surprised the market by resigning from the top job and founding content-creating and distributing company Merry Christmas, in partnership with China's Huayi Brothers.

This is the nation's first film distributor founded with Chinese money.

The industry is paying keen attention on the marriage between the local film heavy weight and Chinese capital. The company will launch its business in July and encompass investment, distribution, international projects and drama production. “The business model centered on big companies has faced limitations. The local film distribution industry's landscape is starting to change,” said Yoo. His company has high hopes to create content and distribute them using its mother company Huayi Brothers' in-China and Hollywood networks.

Other big changes are forecast in the local headquarters of Hollywood film distributors as well. Since Walt Disney Company is taking steps to acquire 21st Century Fox, the mother company of 20th Century Fox, there is a speculation that the Disney-Fox deal will result in the merger of the two companies' Korean units as well. It that is true, the merger will elevate its domestic market share to 15.5 percent, becoming the largest foreign distributor.

According to a Korean Film Council report, CJ E&M was the No.1 distributor with a 15.1 percent market share, followed by Lotte Entertainment with 11.4 percent, Showbox with 10.7 percent and Walt Disney with 9.1 percent in 2017.

Since the content business is relatively lucrative but has lower market entry barriers, it has been siphoning off local and global investment money.

Along with the newcomers who have successively landed in the local distribution market, major local companies plan to jump on the content industry band wagon, signaling inevitable changes in a market where previously the biggest four or five distributors took more than 50 percent of overall market share.

Local entertainment company Kiwi Media, which invested and distributed its first film “The Outlaws” last year, has successfully settled in the market. Including the crime film that attracted 6.9 million, two out of three films it has invested and distributed last year surpassed the break-even point. This year it plans to release four new films.

More will join. Two former senior officials of Showbox joined hands with esthetics company Carver Korea in order to found a film distributor. Celltrion Entertainment, biopharmaceutical company Celltrion's entertainment unit that is produced upcoming film “Uhm Bok-dong,” starring K-pop singer Rain, plans to enter the distribution business, while Dexter Studio that produced the special effects for last year's box-office hit “Along With the Gods: The Two Worlds” that attracted 14 million people, is moving to join the ranks of local film distributors.

Industry insiders find the influx of capital into the market positive.

Previously, production companies had to lean on the major four distributors. But with more channels, the film market may change into one that is more centered on content creators, local experts said. “As the capital enters the local film investment and distribution market, more directors will receive investment which will lead to diversity in films. So overall, it's a good sign for the local film industry,” said Kim Hyung-ho, a movie market analyst. “Instead of blockbusters, with more small and medium films getting targeting 2 to 3 million audiences, it can contribute to expanding the total pie of the local film market.”

Others voice concerns that more players may mean fiercer competition and a smaller pie when annual ticket sales have been staying at around 200 million for years. Mindful of this, the top local players have been expanding their international projects. CJ E&M, which has made remake films of popular Korean titles in Asian countries including “Go Go Sisters,” the Vietnamese version of “Sunny,” plans to make Hollywood remakes of its popular Korean titles.