As "Ten-Million Movies" Revive Theaters, Will CJ CGV's Downsizing Pay Off? [Weekend Money]

Box Office Revenue Reaches KRW 898.3 Billion from January to August
36% Growth Year-on-Year
Theaters Rebound on the Strength of Hit Content

The cinema industry, which endured a prolonged slump beginning with the COVID-19 pandemic, is regaining vitality. Analysts say that audiences are returning to theaters, thanks to a variety of box office hits and differentiated premium theater experiences.

"Ten-Million Movies Are Back"... August Revenue Hits Highest Monthly Level Since Pandemic

Citizens are booking movies at a movie theater in Seoul. Photo by Yonhap News

Recently, Jang Ji-hye, a researcher at DS Investment & Securities, stated, "The competitiveness of movie content is rising, and as consumers who had moved away from theaters accumulate positive viewing experiences, the market is recovering." Jang maintained a buy rating on CJ CGV with a target share price of KRW 8,000.

According to DS Investment & Securities, the cumulative domestic box office revenue from January to August this year reached KRW 898.3 billion—a 36% increase year-on-year—with 87.26 million moviegoers, up 30% compared to the same period last year. The diverse lineup of hit films was a major driver. For example, just the combined audience for the top five films—including ▲The Man Who Lives with the King, ▲Odyssey, and ▲Spider-Man: Brand New Day—reached 46.3 million, leading this growth.

Researcher Jang noted, "Following the success of Korean films in the first half of the year, the strong performance of major international releases in August resulted in the highest monthly revenue since the pandemic." She projected, "With many highly anticipated releases lined up for the second half of the year, box office growth is expected to continue through year-end."

Notably, in August alone, when blockbuster foreign movies were released, box office sales totaled KRW 207 billion, with 19.5 million admissions. This represents the highest monthly figures since December 2019, prior to the pandemic.

Focus on Fixed Cost Reduction and Premium Theater Growth

CJ CGV’s consolidated revenue for the third quarter of this year is projected to be KRW 692.4 billion, an increase of 19% from the same period last year, while operating profit is expected to soar to KRW 47.1 billion, up 102%. Rigorous structural reforms are cited as the key to this turnaround.

An employee is making popcorn at Seoul CGV Yongsan I'Park Mall. The Asia Business Daily Database

Over the past two to three years, CJ CGV has closed unprofitable locations and reduced its workforce to implement these reforms. The number of directly operated sites decreased from 115 in 2019 to 106 in the second quarter of this year, while total employees dropped sharply from 1,423 in 2019 to 894. Labor costs alone have been reduced by more than KRW 48 billion annually, further lowering the break-even point for revenue from about KRW 760 billion.

The increase in moviegoers has led to greater ancillary revenue from high-margin concessions and advertising. Last year, CGV’s standalone concession sales reached KRW 145.5 billion, accounting for 42% of box office sales (KRW 348.3 billion), underscoring its role as a high-margin revenue driver.

Rising demand for premium theaters, which generate higher spending per customer, has also boosted results. CJ CGV currently operates the largest number of premium auditoriums among multiscreen theater operators in Korea, and its subsidiary 4DPLEX is targeting global markets with the ScreenX and 4DX formats. Jang added, "4DPLEX posted its highest ever results in North America in the first half of the year. With the expansion of contracts with major global cinema chains and the production of exclusive content, its value as a platform operator will continue to rise."

This content was produced with the assistance of AI translation services.