Decline of South Korea’s Film Industry as Actor Fees Surge and OTT Expands, Investment Execution Plunges Despite Parent Fund Expansion

Stagnant investment execution in film accounts despite expansion of content funds
Deteriorating profitability due to surging OTT usage and higher ticket prices
Capital erosion in theater chains and collapse of the industry’s virtuous cycle

The government has allocated a massive budget for the parent fund with the goal of propelling Korean cinema onto the global stage, yet a paradoxical phenomenon is emerging in the field as investment execution is rapidly slowing. As the industry’s foundation weakens due to declining audiences, worsening production cost structures, and the proliferation of OTT platforms, demand has contracted even as funding has increased. Industry insiders warn that without fundamental structural reform, the Korean film sector could lose its chance for recovery and slide toward long-term decline.

Rapid Decline in Investment Pace of Parent Fund Film Accounts

According to the financial investment industry on the 4th, the government plans to commit $5.42 billion (content account $4.81 billion, film account $606 million) to the first round of Korea Venture Investment’s content fund this year, with the goal of achieving “K-Culture $222.2 billion.” The parent fund is a public institution established in 2005 under Article 66 of the Act on the Promotion of Venture Investment, and it has accumulated expertise for two decades while leading content fund investment programs under the Ministry of Culture, Sports and Tourism.

According to the Institute for Government Finance, the total budget for contributions to the parent fund’s content accounts expanded from $184 million in 2022 to $503 million in 2024, and reached $391 million as of May 2025, continuing an upward trend. From 2022 to May 2025, cumulative investment commitments totaled $1.40 billion. The government significantly expanded the K-content fund budget following an analysis that the content industry faces an annual funding gap of about $696 million.

The problem lies in the pace of investment execution. In the case of film accounts, the total investment commitments—combining government contributions and private capital—temporarily declined from $55.2 million in 2022 to $39.3 million in 2023 before expanding again to $58.9 million in 2025. Over four years, cumulative investment commitments reached $202 million. However, the investment utilization rate fell from 99.1% in 2022 to 91.5% in 2023, then plunged to 36.3% in 2024 and collapsed further to 10.1% in 2025. Of the total $202 million committed, only $114 million has actually been invested, leaving $87.6 million idle.

Shrinking Theater Attendance Amid OTT Expansion and Higher Ticket Prices

Experts attribute the situation to the government expanding budgets without adequately considering market demand. The Korean film industry is effectively entering a period of decline. According to the Korean Film Council, total theater attendance fell from 226.68 million in 2019, before the COVID-19 pandemic, to 123.13 million last year, meaning more than 100 million viewers have stopped going to theaters. The resulting revenue decline has also been substantial. Korean Film Council data show total box-office revenue dropped from $1.42 billion in 2019 to $886 million in 2024, a decrease of roughly 38%.

The causes of the industry’s crisis are multifaceted. The rapid growth of the OTT sector is cited as a primary factor. Park Sung-joon, professor of film directing at Korea National University of Arts and Media, said, “As preference for OTT content consumption rises, support for producing diversity films has shrunk. With the industry restructuring around large-scale OTT productions that have stronger commercial prospects, the film industry is facing a major crisis.” According to the Korea Communications Commission, the domestic OTT usage rate rose from the 30% range in 2017 to 80% last year.

Higher movie ticket prices have also intensified the crisis. The average ticket price in South Korea was about $5.97 in 2018 but rose to $8.78 in 2023. The increase in ticket prices led to declining attendance, creating a vicious cycle that further suppressed investment. Reduced investment in turn leads to fewer productions and a shortage of box-office hits, accelerating the overall slump in the industry. As a result, the financial condition of theater operators is deteriorating rapidly. CJ CGV posted an operating loss of $35.6 million in the first half of 2025 and is facing mounting financial pressure amid capital erosion.

Actor Fees Account for 43% of Production Costs While Film Performance Slumps

The surge in actor fees has also contributed to the industry’s deterioration. According to the “2024 Korean Film Profitability Analysis” released by the Korean Film Council under the Ministry of Culture, Sports and Tourism, labor costs accounted for the largest share of net production budgets. The average labor cost for a commercial film reached $30.6 million, including $13.3 million for actors and $17 million for staff. In other words, 43% of net production costs were spent on labor.

This cost structure is intertwined with production practices centered on star casting. Lead actors in films typically command fees ranging from $444,000 to $740,000. Some top A-list actors receive fees approaching $740,000 to $962,000. While costs are concentrated on well-known actors to increase box-office potential, the practice ultimately raises production expenses and amplifies the risk of losses.

An even bigger problem is that Korean films are performing poorly despite the massive spending on actor salaries. Last year, Korean film revenue fell to $310 million, down 39.4% ($201 million) from the previous year. Audience numbers also dropped to 43.58 million, a decline of 39.0% (27.9 million) year-on-year. A few titles such as “Zombie Daughter,” “Yadang,” and “No Choice” performed relatively well, but the inability of Korean films to dominate the top ranks of the box office pushed market share down to around 40%. Excluding the pandemic years, it was the first time since 2012 that no Korean film reached the milestone of 10 million admissions.

Foreign films, by contrast, led the box office with animation and globally recognized intellectual property. Foreign film revenue rose to $465 million, up 24.7% from $373 million the previous year, while audience numbers increased 21.0% to 62.51 million from 51.65 million. “Zootopia 2” ranked first at the annual box office, while “Demon Slayer the Movie: Infinity Castle” achieved the highest box-office record for a Japanese film released in South Korea. “F1 The Movie” and “Avatar: Fire and Ash” also enjoyed long theatrical runs, driving the expansion of foreign film revenue.

Experts warn that the Korean film industry could deteriorate sharply starting this year. If the vicious cycle of shrinking investment and declining production continues, next year could become a genuine “collapse threshold.” In fact, with distributors, theaters, and production companies all facing capital erosion, the prospects for restoring the industry’s virtuous cycle appear increasingly dim. A Korean Film Council official said, “The crisis facing Korean cinema did not begin with the pandemic; rather, long-accumulated problems surfaced all at once during the pandemic.” Without fundamental changes across the industry—from marketing and investment-raising strategies to casting practices and story development—recovery will remain difficult.