The entrance of a CJ CGV theater in Seoul, Monday / Yonhap
By Baek Byung-yeul
CJ CGV, Korea's largest cinema chain, is undergoing significant restructuring efforts, including the closure of underperforming theaters and a voluntary retirement program for long-serving employees, as it navigates a challenging Korean market impacted by the rise of online streaming services and declining moviegoer numbers.
The closure of underperforming theaters is a strategic move by the cinema chain. It recently announced that CGV Songpa in Songpa-gu, southern Seoul and CGV Yeonsu Station in Incheon, west of Seoul, will cease operations on March 23.
The company also offered a voluntary retirement program as part of cost-cutting measures amid a struggling domestic market. Around 80 staff members, including those from its headquarters and field operations, have left the company.
The move reflects CJ CGV's efforts to enhance operational efficiency and address financial challenges exacerbated by the decline in theater attendance. Retirees received severance packages equivalent to more than 100 percent of their monthly salary, depending on their years of service. This is the first time CJ CGV has implemented such a program since February 2021 when the entire industry was hard hit by the COVID-19 pandemic.
The challenge facing CJ CGV clearly demonstrates that the movie theater industry here is on the decline.
After a brief postpandemic recovery, theaters have faced increased challenges due to the rapid growth of streaming platforms, combined with changing moviegoing habits and the diversification of content consumption.
The economic downturn since the second half of 2024 has also caused consumers to tighten their spending, making moviegoing a luxury expense for many. Moreover, escalating production costs and high box office risks have made major studios hesitant to produce films, resulting in a drop in both the quantity and quality of theatrical releases.
According to data from the Korean Film Council, total cinema attendance and revenue in 2024 remained significantly below prepandemic levels. Cinema revenue was 1.19 trillion won ($827.5 million), with a total audience of 123.13 million, down 5.3 percent and 1.6 percent, respectively, from the previous year.
To combat these challenges, CGV is exploring new avenues for growth. The company is leveraging its technological capabilities to offer unique cinematic experiences, such as concert broadcasts and special screenings.
By diversifying its content offerings, CGV hopes to attract a wider audience and enhance its profitability. Also, CJ CGV incorporated CJ OliveNetworks, an ICT arm of the CJ Group, as a subsidiary last year to improve financial resilience and create synergy for its cinema operations and digital transformation.
Despite these efforts, experts remain uncertain whether the cinema chain can improve its profitability. The shift toward online streaming services and the declining release of big-budget movies in theaters are expected to continue, posing challenges to traditional cinema revenue streams.
"Although CJ CGV incorporated CJ OliveNetworks as a subsidiary, it is showing a slow recovery due to the prolonged sluggishness in the number of moviegoers," said Choi Yong-hyun, a KB Securities researcher.
CGV's restructuring efforts are part of a broader trend among Korean cinema chains. Other major players are also exploring strategies to adapt to changing market conditions, including diversifying their content offerings and enhancing the overall cinema experience.
Lotte Cinema is transforming its movie theaters into what it calls Culture Squares, evolving them into complex cultural venues that offer diverse experiences beyond traditional film screenings. It is also expanding into content creation and strengthening its distribution network to diversify revenue sources and reduce its dependency on traditional theater income.
Megabox is increasing audience engagement through exclusive and rerelease strategies. Following the successful exclusive release of the Japanese animation “Look Back” and the rerelease of “Love Letter," the cinema chain is focusing on revisiting classic films with 4K AI-upscaled versions and broadening its content range to include musicals, concerts and live events.
English (United States) ·