South Korean film industry rocked by box office fraud allegations

Obtain free South Korean enterprise & finance updates

We’ll ship you a myFT Day by day Digest electronic mail rounding up the newest South Korean enterprise & finance information each morning.

Police investigations, “ghost screenings” and political intrigue — it has all of the elements of the darkly authentic movies that South Korea is known for. However the drama in Seoul is centred on the movie trade itself, and allegations that the field workplace efficiency of tons of of movies has been inflated.

The anti-corruption unit of the Seoul Metropolitan Police Company has in latest months raided three multiplex chains — CGV, Megabox and Lotte Cinema — and three distributors and referred 69 folks to prosecutors for doable felony fees over allegations that cinemas colluded with distributors to magnify ticket gross sales for greater than 323 movies over the previous 5 years.

The police company stated as many as 2.67mn theatre admissions have been solid for movies together with Emergency Declaration, a 2021 catastrophe blockbuster, and Scorching Blooded, a 2022 crime thriller. 

Whereas South Korea’s flourishing movie trade has gained worldwide acclaim, culminating in director Bong Joon-ho successful the Academy Award for Greatest Image in 2020 for his darkish comedy Parasite, its residence market has been struggling for the reason that pandemic.

In contrast to in lots of different developed markets, the highest field workplace metric in South Korea is admissions, not income. Because of this, tickets are sometimes given away or offered cheaply to distributors and company sponsors to bolster attendance figures and field workplace rankings, leading to early-morning or late-night “ghost screenings”. This permits producers to surpass the 10mn admissions threshold that they see as success within the nation of 52mn.

“Gross sales at theatres dropped through the pandemic and [cinema chains] started to demand some ways of promotions,” stated director Goh Younger-jae, who heads distributor Indie Plug. “As a distributor, it’s arduous to show down their requests, given our concern about getting correct display time.”

“It’s an open secret within the trade that theatres and distributors problem and purchase plenty of promotional tickets to drive preliminary gross sales, which is essential for a film’s efficiency,” stated an area movie director. “The decades-long follow received worse through the pandemic as theatres struggled to lure the viewers.”

Trade executives alleged that the police investigation was partly triggered by the sudden recognition of The Crimson Herring, a crowd-funded documentary about former justice minister Cho Kuk, who tried to reform prosecutors’ places of work. Police stated attendance figures had been decrease than reported on the movie’s screenings. “The probe additionally appears politically motivated,” stated Oh Dong-jin, a movie critic.

The tradition ministry has requested the state-run Korean Movie Council in command of amassing native field workplace knowledge to enhance transparency. “The controversy over field workplace rigging has undermined public confidence within the native movie trade,” stated tradition minister Park Bo-gyoon final month. “The trade must provide you with varied measures to revive public confidence.”

Promotional screenings depend for lower than 5 per cent of total admissions, the Korean Movie Council estimates. “Korean filmmakers are extra determined to draw theatre audiences early to interrupt even, so they’re incentivised to problem extra promotional tickets as a part of their viral advertising and marketing,” stated an official on the Korean Movie Council. “If not, there is no such thing as a strategy to make up for his or her losses with different income streams.”

The trade had confronted rising calls to vary the field workplace metric even earlier than the police investigation, stated Oh. “It’s a little bit of an old style method. It’s time to observe the worldwide normal, because the Korean movie trade has globalised,” he stated.

CGV and Lotte Cinema stated they had been co-operating with police for the investigation and their cinema chains have agreed to cease late-night “ghost screenings”. Megabox declined to remark.