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  1. 2009.04.25 Korea's Internet: Hollywood's Best Friend or Foe? (49)
Korea Technology Review2009.04.25 16:06

"The Phantom of the Opera," "Spiderman 3," "Transformers," "Iron Man," and "Star Trek."

These are just a few of the big budget Hollywood summer flicks that premiered in Seoul in the last couple of years, well ahead of their American openings. 

Asia press junkets, usually thrown by the studios either in Tokyo or Hong Kong just a few years ago, are now being held in Seoul, bringing in scores of Hollywood stars to the country. The private jets of Hollywood stars are touching down on the tarmac of local airports sometimes almost every week and it is not considered news anymore among the local press. Just last week, Hugh Jackman, who starred in the latest installment of "X-Men" franchise, was seen on a couple of Korean television shows.

Korean theatergoers, long accustomed to watching big American films usually one or two months after the US theatrical release, are now scratching their heads, asking why they are suddenly being given the unexpected bragging rights of viewing global premieres. 

The reason for this recent turn of the events is seemingly obvious: Korea is now one of the fastest growing film markets for Hollywood studios. The country is the 6th largest market as measured by the number of theatergoers and the 7th in terms of total revenue, according to Korean Film Council. Korean movie fans on average watched 3.1 films a year in 2006, the 3rd highest number after the United States (4.8) and Australia (4.0). "Transformers," a Michael Bay film, for instance, grossed 8 percent of its global ticket sales in Korea, the 2nd largest revenue for the film after America. 

The recent boom in the local theater industry is due in large part to the rapid proliferation of multiplex theaters. CGV, Mega Box and other multiplex theater brands account for near 99.9 percent of total screens in Korea. As many mall owners are beginning to understand the power of multiplex theaters in attracting huge foot traffic to their commercial estates, they usually offer substantial discounts in monthly rent to the theaters. Combined with the rising popularity of Korean films, Korea has established itself as the fastest growing film market in Asia. 

Still, Korea cannot compare with China and Japan in its market size and it will never surpass the two Asian rivals in terms of total theatergoers anytime in the future. Considering its relatively smaller market size in Asia, the marketing budget set aside by the studios for the Korean premiere event is nothing short of a splurge. 

Industry observers believe, however, that the studios are simply aiming to preempt rampant Korean file downloaders by opening them in Seoul first. 

"Importers of foreign films usually set aside about 40 percent of its budget on marketing the films," Hwang Ki-seop at CJ Entertainment told a local paper. "If file downloaders spread negative on line reviews after watching movies well before the official opening date, it will turn away other theatergoers despite the heavy promotion." 

In fact, "Die Hard 4.0" and "Fantastic 4," two Hollywood flicks that opened in Seoul, a week after the US theatrical release, failed miserably in the box office in 2007, despite the high expectations of local distributors. In just less than a week, tens of thousands of illegal copies of these movies are believed to have been downloaded to computers via the extensive local broadband network, wrecking havoc on box office prospects. 

Since illegal file downloaders have practically decimated the Korean video/DVD rental market, it is all the more critical for the studios to recoup their investment in the theatrical release. 

Thanks to their extraordinary promotional efforts, however, Hollywood studios have actually increased their ticket sales in Korea by 30 percent in 2007, whereas Korean films were down by 5 percent for the first time since 1996. 

While Korea's renowned broadband infrastructure sent a devastating blow to the studios that have figured out its unique market situation rather belatedly, studios are beginning to understand that the online buzz machine in the bandwidth capital of the world can be much louder than elsewhere and conducive to earning free publicity. 

Tons of online reviews are uploaded to film sites, Internet cafes and blogs just hours after the premiere, and the distributors can use the data to predict ticket sales elsewhere in Asia. Or they can fine tune the marketing messages based on the online feedback. The real time screen-by-screen box office data collected by multiplex theaters is also valuable information for the studios when they open the same movie in Japan, China and other Asian markets a few weeks later. 

The extensive broadband infrastructure, combined with top class multiplex theater chains, turned Korea to a Hollywood's favorite test bed for the bigger Asian market, providing insights as a reliable market predictor. If so, all those promotional money spent on the star-spangled premiers in Seoul would be worth every dollar. In short, the privileges of world premieres Korean film fans are currently enjoying are given to them in return for their implicit contribution to the Hollywood's bigger Asian marketing campaign. 

Is Korea's Internet Hollywood's best friend or foe? The answer seems to be: "It depends." 

Warner Home Video last year closed its Seoul operation after practically losing the DVD rental market to rampant piracy, but it decided instead to focus on distributing their flicks through MegaTV, KT's IPTV network. 

Korea is the land of early adopters. So, instead of trying to fight the Internet, the studios are best advised to ride the crest of "freeconomics" that is Korea.
Posted by PSB

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