Andy Warhol once said, “It's the movies that have really been running things in America ever since they were invented. They show you what to do, how to do it, when to do it, how to feel about it, and how to look how you feel about it.”As we can infer from what Andy Warhol said, movies have now become one of the leading industries, and this phenomenon is not only limited to America but all over the world. The gradual development of the film industry has enabled consumers to enjoy a variety of movies. Supporting this development were many government policies encouraging the growth of the movie industry. The most well-known but also the most controversial one is the screen quota policy. The screen quota policy in Korea is a system aiming to prevent the encroachment of foreign movie industries and induce the systemization, vitalization of the Korean movie market In spite of its good intention, however, the screen quota policy has caused continuous controversy and has been under debate for a long period of time.
The Root of Screen Quota
The screen quota was first carried out in 1927, England, with the enactment of Cinematograph Act which included regulations enforcing screening over 30% English movies in the theater. This was to confront the “Studio System” adopted by Hollywood between 1920 and 1950. “Studio System” is a means of film production and distribution that promotes profit through vertical integration - an arrangement in which the company runs its own supply chain. Through the Cinematograph Act, the English film industry also tried to gain profit and achieve vertical integration. Following England, other countries such as France, Brazil, and Pakistan adopted the screen quota.
Korea was no exception. From 1967, January 1st, the Korean screen quota was first enforced, making screening of domestic films for 90 days per year mandatory. However, along with the freedom to import foreign films in 1985 and the increase of direct distributing of Hollywood films in 1988, sense of crisis among the Korean film industry grew. Moreover, with the proprietors of theaters simply obsessed on foreign earnings, the screen quota system became a law with no effect. As a resolution, the cineastes formed an observer mission of the screen quota. After the observer mission directly made sure that the screen quota was being conducted, the system settled.
The Alteration of the Korean Screen Quota Policy
The screen quota policy has gone through several changes throughout the Korean history. To begin with, in August 1966, after the Secondary Amendment of the Motion Pictures Act, the screen quota policy was introduced in Korea. Motion Pictures Act Article 19, Clause 3 notes that the executors of theaters should screen domestic films according to the screen rates of foreign films enforced by the presidential decree. Also the specific number of films that should be screened was noted in Motion Pictures Act Article 25 as 90 days per year.
In August 1970, after the Third Amendment of the Motion Pictures Act, the regulation was relaxed to screen at least 3 domestic films for a total of 30 days per year. In 1973, the system was reinforced again to screen more than one third of the screening days each year. In 1974, additional changes were made on the Motion Pictures Act. Alternate Screening System - screening foreign and domestic films alternatively- was introduced and regulated domestic movies to be screened half the amount of the foreign films. In 1981, the Alternate Screening System was modified to screening the same percentage of foreign and domestic films. Moreover, the number of screening days was increased to 165 days per year. In 1984, however, the Fifth Amendment relaxed regulations to 146 days, roughly 2/5 of screening days each year. On December 1995, the existing Motion Pictures Act was abolished and the Promotion of the Motion Pictures Industry Act was enforced. This Act maintained the existing 146 days but allowed to shorten 40 days when necessary. Now, Articles of the Promotion of the Motion Pictures Industry Act include regulations about screening days, penalties and standards for shortening. The ‘screen quota’ entered new conditions in 2006, when the United States of America demanded to downscale the screen quota during the Free Trade Agreement (FTA). The issue was one of the four prerequisites of the FTA. Accordingly, the Korean government announced to reduce screening days from 146 days to 73 days. This sparked strong opposition of cineastes in the Motion Pictures Association of Korea but the government, confident that the Korean film already has international competitiveness, prepared a bill to cut down screening days. The issue was approved by the National Assembly in March and as a result, the new screen quota was enacted from July.
After the 2006 alteration of the screen quota policy, a heated debate has been going on between those who agree and disagree to the policy itself. Both sides have their own basis for their claims.
Screen Quota, Key to the Success of Film Industries
People who believe that the screen quota system should be maintained are mostly those who are related to the film industry. The cineastes argue that the screen quota brings both quantitative and qualitative development of films. They believe that without the system, simply commercial and amusement based movies will be made for the purpose of box-office profits. In addition, they are coping with the criticism that screen quota is a type of collectivism by arguing that the system has been a foundation for the development of the Korean movie industry. An increase of market share of domestic movies supports this idea. Ever since the observer mission of the screen quota has been in action, the market share has increased from 16% in 1933 to 21% in 1995, 25% in 1997 and over 40% in 2001. Therefore, the cineastes claim that if the screen quota diminishes, investments will be restricted and thus, the number of domestic movies will sharply decrease while foreign films will increase.
Another assertion maintaining the screen quota is that it protects the identity of domestic movies. On June 30th, 2006, the Democratic Labor Party issued a statement on the downsize of screen quota upon signing FTA with the U.S.A. The statement says, “As shown in the ‘Convention on the Protection of the Diversity of Cultural Contents’, culture is not a product. It is hard to regenerate culture once encroached by a foreign country. It is hard to understand how the Korean government can readily submit to America after seeing how we are going through many difficulties since the last cultural invasion during Japanese occupation. Diminishing the screen quota can only be interpreted as the government giving up on the Korean film industry and the sovereignty of culture. It is only a matter of time before we give away other parts of our rights to the U.S.A. We need to keep the screen quota as it is. We want the president to speak for the people of Korea and not simply yield to America’s request.” Those who approve of screen quota also say that this system encourages the growth of art films or independent films. Also, examples of other countries such as Mexico show the consequences of disregarding the positive results screen quota can bring about. In 1994, Mexico abolished the screen quota according to the North American Free Trade Agreement with the U.S.A. As a result, the Mexican film industry soon became uncompetitive. Mexico’s film count has averaged only one-to-two dozen features a year, and its share of the national box office has wavered around ten percent.
Screen Quota Really Effective?
In contrast to those who believe that the screen quota is effective, opponents of the system argue that it should be abolished. The Free Trade Commission of Korea (FTC) proclaimed that “The Korean film industry should be able to compete with foreign films without excessive protection from the ‘screen quota’ and should grow autonomously. When movie companies start to take the system for granted and excessively depend on it, there will be no development and companies will settle for the present.
The most pervasive basis for abolishing the screen quota is that this policy violates the freedom of competition in a capitalistic economy. In June 1994, the Korean Federation of Theater filed an unconstitutionality suit, claiming that screen quota invades the right to compete justly. However, the Constitutional Court found the law constitutional, claiming that the screen quota allows Korean films to fairly compete with other movies in spite of its poor production environment circumstances compared to foreign countries. Oh Jung-il, an industrial research member, wrote in a column in 2004 that screen quota is now unnecessary by arguing that situations have changed since the Constitutional Court’s decision in 1995. He said that while market share of domestic movies was only 20% in 1995, it is now over 50% and therefore, the law’s purpose to ‘protect the infant-industry’ cannot be justified anymore. In other words, the Promotion of the Motion Pictures Industry Act, which is the basis for the screen quota system, is possibly an unconstitutional law violating the property rights of theater owners.
On the extension of this argument is the claim that Korea is now competitive enough to compete with foreign films without the help of the system. An example would be the success of the movie The King and the Clown. This movie, crafted with 2.5 billion won, excelled the Hollywood blockbuster King Kong, in which 200 billion won was invested. Kim Hak-soo, the writer of the book The Korean Film Industry Outside of the Screen, even said that the screen quota is actually a rather political system which controls the thoughts of the public. He points out that the policy is similar to Japan’s regulations on movies in 1934, right before the Sino-Japanese War. This policy was justified as a means to prevent unreasonable ideas spreading among the Japanese public while preparing for the war. Kim Hak-soo claimed that the screen quota is no different from the regulations on movies imposed in Japan in 1934 and therefore, it is undeniable that the ‘screen quota’ has political intentions.
Screen Quota, Now an Empty Form
In 2006, researcher Lee Tae-kyu who works at the Korea Economic Research Institute wrote a report on the screen quota and the movie industry of Korea. In his report, he wrote several reasons why the system is no longer necessary. Even now, Lee Tae-kyu still believes that the system should be abolished. His reasons were mostly based upon the current structure of film industries in Korea. He argued that to fully argue the effectiveness of the screen quota, we have to understand several characteristics of the Korean movie industry. Unlike the past, the film industry in Korea has now formed a vertical combination between production and distribution. CJ entertainment and Lotte Entertainment are the two widely known companies operating by this structure. These two companies are also the biggest leading film companies in Korea and take care of both production and distribution. Movie theaters CGV and Lotte Cinema are the distributing agencies of CJ and Lotte Entertainment. This implies that irrelevant to the screen quota, companies that have formed a vertical combination will screen their own movies. Since over 4 major film companies both produce and distribute movies nowadays, the screen quota is unnecessary and ineffective.
In addition, to the argument that screen quota protects art or independent films, Lee Tae-kyu said, “Screen quota is not the fundamental resolution. We need to find alternative ways to encourage these second division movies. One solution is for art or independent films to target markets overseas. For example, Kim Ki-duk, a movie director who has won several awards in international film festivals, is more popular abroad. This is because his movies are mostly considered novel in the foreign film market while in Korea, it is considered as an independent movie. Therefore, if second division movies target foreign investors and markets rather than trying to compete with commercial films made by major film companies, it will likely be more successful.” However, he also stressed that people should not see art or independent films and commercial films in black and white. He argued that these movies are all part of the film industry and if the market grows, so will the consumers’ wants. This means that they will look for many different types of movies in order to fulfill their diverse desires. Therefore, it is crucial to focus on developing the Korean film industry as a whole.
Finally, Lee Tae-kyu commented that in order to further develop the Korean film industry, solutions are needed to lower risks and encourage investment in diverse movies. He said “Unlike America, Korean movie staffs do not sign an employment contract. This is because in the process of making movies, there is no specific schedule. Therefore, investors find movies too risky to invest. As a result, they tend to invest mostly in major film companies and often disregard movies made by other companies. Therefore, it is hard for the film industry to grow evenly. There needs to be a fundamental approach.”
Assistance, Not a Right
It is hard to judge the effectiveness of the screen quota. Opinions from both sides all make sense and each have reasons. However these two sides have something in common. They all want the growth and advance of the Korean film industry. Whether the ‘screen quota’ is a prerequisite for this or not is subsidiary. What is most important for the Korean film industry is to gain competitiveness even without protection such as the screen quota from the government. We should not consider the screen quota as a divine or eternal right. We need to strive for the success of Korean movies in the equal competition with foreign films.