Movie theater's transformation

"There's everything but nothing."

Due to the impact of Corona 19, various industries are facing unprecedented changes. Singer's concert industry has shifted to on-tact concerts, while personal mobility has grown six times in utilization. The most noticeable change was in the film industry. Various OTT services, including Netflix and Watcha, have grown rapidly, and many theaters have been closed due to a series of deficits. The theater industry is trying to change due to the epidemic, which shows little sign of ending.

Netflix, the largest of its OTT (Over the Top) services, surpassed 500 billion won in payment income in Korea last year alone. Compared to 65.7 billion won in 2018 and 248.3 billion won in 2019, the company showed tremendous growth. This can be seen as the number of hours spent at home increased due to the Corona epidemic, and Netflix's payment amount reached a record high of 58.7 billion won in December 2020, when about 1,000 people were confirmed to the epidemic every day.

As domestic dramas of "Psycho, But It's Okay(사이코지만 괜찮아)”, “Crash Landing on Love”(사랑의 불시착), “Itaewon Class"(이태원 클라스) are gaining sensational popularity overseas, various platforms are expanding their presence in Korea. It is expected that Apple TV, HBO Max, Amazon Prime, and Disney Plus will enter the Korean market this year, leaving behind Netflix and Watcha, which are fiercely competing now. Amazon Prime discussed with SK's Wave and Disney Plus did with Korea's top three telecommunications companies, so it seems that the timing is not far away.

On the other hand, theaters are steadily going downhill without overcoming changes. CGV lost 392.5 billion won (39.2 million dollars) annually in 2020. Sales fell 70% year-on-year, and net losses increased, widening the deficit. According to the company's explanation, operating profit and loss turned into a deficit because the fixed cost burden remained the same despite the decrease in theater audiences. Megabox's sales last year also amounted to 104.5 billion won, down 68.6 percent from 2019. Its operating profit ratio, which indicates the quality of its operations, turned negative to -65.3%.

Attention is focused on how the film industry will change due to this joy-and-sorrow intersection between theaters and OTT services. CGV quickly introduced ICECON. ICECON refers to interactive, colorful, exciting, and content that is enjoyed together. It means that it will continue to present various contents through mutual communication with customers. Icecon was launched in October last year and had been planning and introducing alternative content for theaters. There are four categories: Play, Stage, Channel, and Library.

A live gag stage that delivers laughter to the audience has also emerged. The stand-up comedy show "Shogman" is held every Friday at CGV Sinchon Artreon. New comedians will be the main characters and present various shows such as singing, dancing, gag, and performance.

A rental platform for console games is also active. CGV AzitX is a console play rental platform that provides high immersion. With the theater's large screen and colorful sound implementation, it is said to have achieved "gamer's dream" with the best game environment. "It's an attempt to find out what else we can do in theaters," said Cho Sung-jin, a CGV strategic support manager. Lotte Cinema also operates 'Lotte Cinema Game Zone' that utilizes super-large LED screens.

Popcorn and other menus are indispensable in movies. Lotte Cinema launched a popcorn delivery service with Coupang Eats. It has differentiated itself from existing products through the development of new menus optimized for delivery and provides great value by using eco-friendly packages. An official of Lotte Cinema said, "I hope everyone can enjoy popcorn that could only be enjoyed at the movie theater anytime, anywhere," and announced that the delivery service will continue to expand in the future. It attempted to collaborate with BBQ. In addition to attractions and entertainment, the theater is transformed into a theater tailored to customers' needs by creating a variety of foods.

With the promotion of OTT services, the domain of the film industry is turning upside down. As the platform market expands, consumers' choices expand further. The theater should now be transformed into a space where customers can see everything they want, away from the existing perception that it is a place where they only watch movies. If we take time to make progress and strive for various consumer segments, we will be able to maintain our position as a unique feature of the film industry.

Translated by TED