2025 Investment Status and Activation Strategies for Korean Films

The Korean film industry is going through a difficult period. In 2024, the total number of moviegoers was 123.13 million, which is only about 54% of the 226.68 million recorded in 2019 before the COVID-19 pandemic. The average number of times an individual watched a movie per year also dropped to 2.4 in 2024, returning to levels seen in the early 2000s when the Korean film industry was still growing. Overall, the market size has not recovered beyond 60% of pre-pandemic levels.

2024 Korean Commercial Film Average Profitability: –16.4%

There are many analyses of why the theater market has not fully recovered. The biggest factor is that during the pandemic, people became accustomed to watching video content through online streaming services (OTT), which were widely adopted.

Due to the market contraction, film profitability has also declined. Korean commercial films, which refer to films with a net production cost of at least 3 billion KRW, suffered a severe hit during the pandemic. In 2020, their average profitability dropped to –30.3%. Although two films exceeded 10 million viewers in 2024, the average profitability was still –16.4%. This is a stark contrast to the 10.9% profitability recorded in 2019 before the pandemic.

The bigger issue is that the poor profitability of films has led investment companies and distributors to reduce their investment scale, further shrinking the market.

Annual Investment in Korean Commercial Films: 400 to 450 Billion KRW

As of 2024, the average net production cost for a commercial film was 9.38 billion KRW, and the total production cost was about 11.5 billion KRW. Given the number of films released, the total production cost of commercial films per year is estimated to be around 400 to 450 billion KRW.

As of 2024, the average net production cost for a commercial film was 9.38 billion KRW, and the total production cost was about 11.5 billion KRW. Given the number of films released, the total production cost of commercial films per year is estimated to be around 400 to 450 billion KRW.

However, after the COVID-19 pandemic, the significant drop in film profitability has led major investment and distribution companies to significantly reduce their investments. The total distribution revenue of the five major investment-distribution companies was approximately 785.8 billion KRW in 2019 but dropped to 479.7 billion KRW in 2022 and 436.6 billion KRW in 2023, nearly halving.

As these investment-distribution companies reduced their investments, venture capital investors also began cutting back on film investments.

Expected Number of Korean Film Releases in 2025: 10 to 14

The impact of investment contraction is evident in the expected number of new film releases in 2025. The five major investment-distribution companies—CJ ENM, Lotte Entertainment, NEW, Showbox, and Plus M Entertainment—plan to release only 10 to 14 Korean commercial films in 2025. In comparison, 35 to 37 films were released annually between 2023 and 2024. This represents a dramatic reduction to about one-third of the previous level.

Given these circumstances, the industry is looking to the government for increased support. One potential solution is expanding contributions to the state-run fund (Mother Fund) for the film industry, ensuring continuous capital flow to sustain production.

The Role of the Mother Fund in Supporting the Film Industry

This crisis may be even more challenging than past downturns. Unlike before, even the major investment-distribution companies that have traditionally led film production and distribution are cutting back on investments. Additionally, the rise of OTT platforms has prompted a re-evaluation of what constitutes a "theatrical film," making the recovery process even more complex and time-consuming.

Government funding will play an increasingly crucial role in sustaining the industry. Fortunately, since the film industry's crisis deepened in 2020, the government has steadily increased its contributions to the Mother Fund, thereby expanding capital support for film production. In 2025, the government increased the new investment in the Mother Fund's film account to 35 billion KRW.

Creating a More Investor-Friendly Environment

While increasing investment is a positive step, industry experts argue that the Mother Fund must become more investor-friendly. Because the fund has a policy-driven nature, it is subject to numerous regulations. These restrictions were not a major issue when the industry had abundant private investments, but in times of investment contraction, they can make fund management even more challenging.

To address this, the government has relaxed some conditions in 2025, such as eliminating the previous requirement that 25% of the committed capital had to be invested within the first year of the fund’s formation. However, investors argue that since funds are created to generate returns, the government should fulfill its policy objectives through separate support programs rather than imposing restrictions on investment funds.

Throughout history, crises have often led to transformations. Since capital is essential for the survival of the film industry, now is the time for all stakeholders to come together and initiate changes that will help the industry find new paths for growth.

*Research report on "Policy Finance Utilization for Investment Activation in Korean Films" to be published on the Korean Film Council website (in April 2025).

Author: Kim Yoon-ji, Senior Researcher at the Overseas Economic Research Institute, Korea Eximbank

Original Source: Korean Film Council Web Magazine (Click)