SEOUL -- On the surface, 2014 was a great year for the South Korean film industry.
Domestic box office receipts hit an all-time high of 2.03 trillion won ($1.8 billion), a rise of 7.3% from 2013, according to data from the Korean Film Council. The number of tickets sold, the primary metric for film success in South Korea, rose 0.8%, according to the Ministry of Culture, Sports and Tourism.
But these numbers were driven by just a small number of films. 2014's top draw, "The Admiral: Roaring Currents," a production from local company CJ E&M, grossed more than $120 million and was by far the top film of the year, alone accounting for 8.15% of all box office revenue, according to data from the Korean Film Council. The film, about a 16th-century Korean naval triumph over a much larger and better equipped Japanese fleet, struck a nationalistic but reassuring chord with local viewers, coming out just months after the Sewol ferry accident, which killed more than 300 passengers.
"The Admiral" is now the highest-grossing South Korean film ever. Industry insiders, however, are becoming anxious about CJ E&M's growing dominance over the distribution and production of movies in the country.
While in many developed markets, film production, distribution and cinema operation are no longer integrated, this a core piece of the business model for the parent companies of CJ E&M and rival Lotte Entertainment. The two groups, together with cinema chain Megabox, accounted for 96% of movie attendance last year.
Nearly 25% of all tickets purchased in South Korea last year were for CJ E&M films. With the help of hit movie "Ode to My Father," that figure jumped to 46.5% in January of this year, according to the Korean Film Council.
"Ode to My Father," which opened Dec. 17 and has been nominated for best picture at the Asian Film Awards, took in $11 million in its opening weekend. Strong holiday screenings helped make the year's sixth-highest-grossing film. As of late February, it had brought in more than $110 million and is second in all-time gross behind "The Admiral."
The large market share of CJ and its rivals could bode ill for the industry's long-term health as films from smaller production houses find it hard to get showings or find support. Some insiders even suggest the industry is starting to resemble other sectors dominated by chaebol, the country's powerful, family-run conglomerates.
"CJ Entertainment is coming to occupy a bigger and bigger portion of the domestic market, which makes it harder for less established directors and more experimental films to get on screens," said Kim Young-jin, a professor of film studies at Myongji University in Seoul. "Over the long run, there will be less diversity in the Korean films seen both domestically and overseas.
"The multiplexes' dominance is likely to lead to diminishing creativity and overall quality in the future," he said, arguing that market consolidation will result in a more conservative approach to films that will eventually lose the interest of audiences both in South Korea and abroad.
Regulators, legislators and other officials are seeking to check this trend. In December, the Korea Fair Trade Commission fined CJ CGV, the group's movie theater arm, 3.2 billion won for unfairly discriminating in favor CJ E&M films in allocating screenings, especially for larger-screen cinemas. Rival Lotte Cinema was fined 2.3 billion won for favoring movies from affiliate Lotte Entertainment. "The KFTC will continue to monitor oligopolists impairing fair trade by privileging their affiliated companies," the agency said.
Such reassurances are not enough for some. In January, filmmaker Eom Yong-hun sent an open letter to President Park Geun-hye, who last year noted the plight of smaller studios, appealing for a law to end vertical integration of the sector.
CJ E&M and CJ CGV are units of the CJ Group, which in turn was part of Samsung group before splitting off in the 1990s. Aside from its own movies, CJ E&M distributes Paramount Pictures and DreamWorks Animation films in South Korea and Korean movies abroad.
CJ E&M's movie business posted an operating loss of 4 billion won on revenue of 211.3 billion won last year. The company was hurt by a few unsuccessful domestic films, including "Make Your Move," but its Vietnamese co-production "Let Hoi Decide" set an all-time box office record in that country.
CJ CGV, which opened South Korea's first multiplex cinema in 1998, has expanded into Vietnam, Indonesia, Myanmar and the U.S. and is now one of China's 10 largest screen operators, with ambitions to crack the top three by 2018. CJ CGV generated a consolidated net profit of 16 billion won on 1.04 trillion won in revenue last year.
Critics say the success of CJ's films is due in part to the tight control it holds over South Korea's screens.
According to Nemo Kim, a lecturer in film studies at Kyunghee University in Seoul, the success of "The Admiral" and "Ode to My Father" "wasn't an organic popularity at all." For Koreans set on seeing a movie in the theater rather than at home, there were few other choices, she said.
Last year, "The Truth Will Not Sink with Sewol," a controversial documentary about the ferry sinking, premiered at the Busan International Film Festival. The film made serious allegations of incompetence and opacity in the government's response to the accident, arguing that it willfully misled the public and the media about the resources deployed to save passengers.
Co-director Lee Sang-ho said that due to the film's sensitive subject matter, it was shut out of multiplexes and only reached smaller theaters through the personal contacts of the filmmakers. "None of the big companies would touch it," he said. "The space for independent films that are critical of the government is getting smaller and smaller."
Until South Korea became a democracy in the late 1980s, films were strictly censored by the state. The film industry was a key part of the South Korean government's efforts starting in the late 1990s to build both soft power and thriving cultural industries through overseas exports. A series of blockbusters, such as 2006's "The Host" and 2004's "Taegukgi" drove a boom that built one of Asia's most robust film industries.
CJ E&M says that, far from trampling on smaller players, it is using its growing industry presence to actively support independent films. "CJ E&M more actively invests in many Korean films and engages in [more] film production work than other film production players," said a company spokeswoman.
While many South Koreans are turning to film-streaming services, independent films have not yet vanished from the cinema landscape. A surprise hit of 2014 was "My Love, Don't Cross that River," a low-budget documentary about an elderly rural couple. The film brought in more than $6.7 million at the box office, and there's reason for audiences to hope that it won't be the last unique offering to find a niche in South Korea's changing film market.