Ban OTT Release for 6 Months After Korean Film Openings? Are Viewers’ Rights No Concern?

It has been a long time since the notion that the latest movies must be watched in theaters was shattered. Instead of going to theaters, consumers have become deeply enamored with the pleasure of watching movies at home. Although the effects of COVID have faded, movie theater attendance is not expected to return to past levels. That is because consumers have now experienced the convenience of OTT services, which let them watch unlimited movies throughout the month at whatever time they want for less than the price of a single movie ticket.

This shift in movie-watching culture is clearly reflected in the statistics as well. According to the 2022 Survey on Movie Consumer Behavior, only 32.1% of respondents said they mainly watch movies in theaters. The remaining 67.9% said they prefer enjoying movies at home at a lower cost. It is no exaggeration to say that the center of gravity in the content market is shifting, given that even people in their 50s and 60s, who were once unfamiliar with online consumption, have now entered the OTT market.

Given these circumstances, movie theaters are facing serious difficulties. They were hit hard by COVID social distancing measures, and when they sharply raised prices to avoid losses, demand fell even further, trapping them in a vicious cycle. From the audience’s perspective, there is in fact little incentive to go to a theater while paying around 15,000 won for a weekend ticket.

In response, the Ministry of Culture, Sports and Tourism has stepped forward, saying it will introduce a new regulation to save theaters in crisis. It plans to enforce a holdback system that would prohibit newly released films from being made available on OTT platforms for six months. It says the policy will begin immediately with Korean films that received government budget support and then gradually be expanded. The simplistic calculation is that if people can watch new movies only in theaters, revenue in the offline movie market will rise.

From the consumer’s perspective, this can only be bewildering. It is hard to understand why the government would regulate the very method consumers most prefer in order to prop up a specific industry. I am reminded of my shock at a discussion forum I attended in 2023, where the director general of the content policy bureau at the Ministry of Culture, Sports and Tourism mentioned the “introduction of a system to regulate market order” and said they were “not focusing on consumer welfare.” This holdback regulation likewise seems to be part of the same trend: an attempt by the government to regulate the content market without considering consumers’ freedom of choice, which is deeply concerning.

It will be difficult to save theaters through regulations that inconvenience consumers. This is an era in which countless forms of video content compete, not just movies. If a holdback regulation is introduced, only Korean films would suffer reverse discrimination by entering the OTT market six months later than foreign films. It would also likely produce the side effect of encouraging illegal distribution websites.

In the 1950s, American movie theaters were also threatened by the emergence of a new competitor: television. Rather than relying on regulation, theater owners built their own competitiveness by offering what only theaters could provide: large screens and the blockbuster films suited to them. As in Hollywood’s successful case, Korean theaters have no choice but to win consumers’ favor by offering an irreplaceable experience that online platforms can never deliver.

If the Ministry of Culture, Sports and Tourism truly wants to save theaters, I suggest it begin by abolishing the screen quota system. Because regulations limit the mandatory screening days for films, popular IMAX movie tickets are often resold on the secondary market at premiums two to three times the original price. In other words, a flawed system that prevents theaters from supplying more of the films consumers actually want is not only inconveniencing consumers but also making theaters’ situation even more difficult. More important than regulation is building the competitiveness needed to win consumers back. We should remember that even though regulations were introduced on large discount stores in the name of saving traditional markets, consumers still do not return to traditional markets. I hope Korean theaters can use this crisis as an opportunity to become even more competitive.

Eun-kyung Kwak, Secretary General of Consumer Watch

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Original title: 한국 영화 개봉 후 6개월간 OTT 금지? 시청자 권익은 관심 없나

Author: Eun-kyung Kwak

Date: 2024-04-09

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=26553