A dramatic dispute between film directors and film stars highlights how soaring guaranteed payments for actors could cripple Korea's film industry -already struggling with a shrinking share of the domestic market - and taint the image of the Korean Wave, an Asia-wide surge in the popularity of Korean culture.
Not long ago, Korean filmmaking was touted as a thriving business, with locally made high-quality films outsmarting Hollywood blockbusters at the box office and grabbing awards in the world's major film festivals. Korea's film industry is valued at 717 billion won and boasts an 18-percent annualized growth rate, but in recent months, the market share of Korean movies has declined amid an overall slump in ticket sales.
Korean movies' share in the local box office hit a new low of 43.6 percent in June, down from 59 percent in May and 69.8 percent in April, according to the Korean Film Council and IM Pictures. The figure is respectable compared with other foreign cinema markets where Hollywood flicks dominate, but given that Korean films accounted for 51.1 percent of the market in June 2003 and has outpaced Hollywood competitors in the past couple of years, recent signs of weakness are sending alarms. This year, only a couple of Korean movies including director Chung Yoon-chul
, director Park Young-hoon
's "Innocent Steps
" and director Choo Chang-min
's comedy "Mapado"
turned a profit.
Now, to add to industry woes, producers and actors are locked in an emotional turf war over profit-sharing, marring their own public image and credibility. The row began on June 24 when Kang Woo-seok
, one of the most influential filmmakers in Korea, known for the 2004 blockbuster spy flick "Silmido
", publicly criticized some star agencies and actors for demanding excessive fees and profit sharing. Kang alleged this led to outsized production costs and placed an unfair burden on producers. Kang's remark sent shock waves throughout the film industry, as he has built a strong position in Korea through Cinema Service, a major film distributor and investment company. In attacking the growing "star power", Kang made public the names of two actors, Choi Min-sik
and Song Kang-ho
. Angered by the unprecedented revelation of identities, the actors held a news conference on June 29, attacking director Kang and demanding his apology.
Song said, "It is very regrettable that director Kang distorted the facts by saying Choi Min-sik
and his management agency Bravo Entertainment, and my manager Shim Pil-bo and I have an unreasonable guarantee demand". Choi, known for his roles in critically acclaimed "Chihwaseon"
directed by Im Kwon-taek
and "Old Boy"
by Park Chan-wook
, both of which made it into the 2004 Cannes film festival, said, "I wonder whether Kang's reckless remark like 'Actors are seeking money only' is appropriate for a person who really cares about the problems of the Korean film industry". Eventually, director Kang sent an e-mail, giving a formal apology, which was accepted by the lead actors. Although the high-pitched emotional battle between the powerful director and actors has been wrapped up, the underlying conflict and problems remain largely unresolved. The heart of the matter is that producers and filmmakers face surging production costs partly fueled by a sharp increase of the guaranteed payment for actors and blame the so-called star system for the troubles plaguing the entire industry. According to government data, the average production cost, including marketing, has been on the rise: from 1.5 billion won in 1998 to 4.17 billion won in 2003 to 4.3 billion won in 2004.
Last year, 71 movies were released but only 25 broke even or turned a profit. Compared to 2003, the average profitability plunged 32 percent, net production cost went up by 13 percent and marketing expenses surged 17 percent. But the average domestic revenue per movie contracted by 5.9 billion won.
The dearth of actors whose appearances are thought to spur bigger ticket sales, and the tendency of investors to favor only top actors aggravates the problems.
Before pledging to invest in a film project, investors usually ask production houses to secure top actors. As the pool of top-rated actors is fairly small, production houses are forced to offer big money, often an amount that erodes profit margin. If the film flops, producers and investors suffer big losses, but actors routinely get away with fat, guaranteed payments.
From the producers' perspective, the star system is distorting the market. Furthermore, management agencies that control actors are demanding what producers call an "unjust share" of profits through joint production contracts.
Some management companies are asking for a 50 percent share in the production house's profits, even though they do not shoulder any financial burden or run risks if the movie in question fails to eke out any profit, except for allowing their actors to star in the film. For instance, a top actor got 500 million won in guaranteed payments for playing a role in a movie released late last year. His management agency's contract secured a 30 percent share of any profits the production house might make.
The net production cost was 4.2 billion won, and to break even, the film should have sold 1.7 million tickets. But it sold only about 900,000 admissions. Yet, in the next film project, the same actor signed a contract for a fee of 500 million won, and the same management agency demanded - and got - a 50 percent share of the future profit to be earned by a production house.
Actors claim that producers are just passing the buck. In interviews with local media, a host of leading Korean actors have argued that a surge in actors' fees has been decided by the market, not their "greed" to seek excessive income. In addition, actors said some directors and producers complain about getting top actors to sign on to their film projects, but in many cases, producers and directors should scrutinize the quality of their projects before blaming actors for refusing to accept casting proposals. The star system is also a common practice in the global movie industry. Hollywood, for instance, revolves around the star system in which the "logic of capital" decides the fate of major filmmaking projects, the Korean actors say.
In fact, not all top actors are determined to cash in on their star power right away. Actor Song Kang-ho
, who has decided to play the main character for "The Host"
to be directed by Bong Joon-ho
, said at a press conference last week that his guaranteed payment amounts to 500 million won, but instead of receiving the sum in case, he has re-invested it into the film project.
"I have two reasons. First is that I want to help the film get produced more smoothly because of its high production cost of 12 billion won, and second is that I feel like this is 'my movie' and I have to do my part for investors". But the Korean Movie Picture Producers Association is unimpressed. On June 28, it held a news conference at the Press Center in Seoul, saying that "The increasing abuse of power by stars is undermining the growth of the film industry". The association also put forward several proposals aimed at remedying the problems, like standard production rules and the establishment of an acting school to expand the pool of actors. It said it would not accept the joint production or stake-sharing proposals from management agencies and refuse to pay extreme guaranteed payments to actors, unless the fee was directly linked to the box office performances. The real winners are theater owners. Whatever happens, they get 50 percent of ticket shares, while the remaining 50 percent is reserved for film investors, who have to set aside about 40 percent of its own share for production partners. In other words, production houses get just 20 percent of the total ticket sales, and then share the sum with actors - and now even management agencies. Unless the movie in question turns out to be a really big box-office hit, production houses have to live with paltry profits - or more often, huge losses. This sorry situation, producers claim, makes it hard to save for future film projects and run operations and foot the bill for operations of their offices.
On June 28, major management agency chiefs held a meeting and pledged to work out problems in cooperation with other parties in the film industry. They welcomed the idea for drawing up the standard production rules and would launch an association in August.
For the moment, the results of the industry's problems are there for all to see. For the summer vacation season, the Korean movie lineup is weaker than ever, with cookie-cutter genre-oriented features or sequels filling up the slots.
By Yang Sung-jin