The government and the film industry are set to conclude discussions on movie holdbacks within this month and sign a voluntary agreement.

According to the industry, the Ministry of Culture, Sports and Tourism and the Korean Film Council have been operating a public-private consultative body since May to improve South Korea's film distribution structure. The body has discussed the holdback system, measures to normalise the revenue structure of South Korean films, and ways for distribution platforms such as cinemas and OTT services to coexist. It is set to sign a voluntary agreement within this month.

The consultative body includes 22 people from production, distribution, cinemas and platform sectors, including Eun Lee (이은), head of the Korea Film Producers Association, Hwa-bae Lee (이화배), head of the Distributors Solidarity, Han-sik Shin (신한식), director at the Korea Cinema Industry Association, and Yong-hwa Yoo (유용화), chairman of the Korea IPTV Broadcasting Association. Separately, the National Assembly is also discussing legislation to mandate a "six-month holdback". Lim Oh-kyung (임오경), a lawmaker from the Democratic Party, introduced a bill in September last year to allow films to be supplied to other platforms such as OTT services only after 6 months have passed since the end of their theatrical run.

A holdback refers to the waiting period between a film's theatrical release and its availability on other distribution channels such as OTT, IPTV and VOD. South Korea currently has no statutory holdback period that applies uniformly to all films.

Consumer groups are also pushing back against the holdback discussions. They cite a lack of a channel for consumers' voices to be reflected in the consultative body. Consumer group officials are not believed to be participating in the body.

The Citizens' Coalition for Consumer Sovereignty said in a statement on Aug. 18 that it opposes a uniform six-month holdback presented as a legislative option in the National Assembly and argued that measures for the film industry should be drawn up around consumer choice and convenience. It also said the public-private body should not use the National Assembly's six-month standard as a benchmark in drafting a voluntary agreement.

Stakeholders are also split over how to set the holdback period.

According to a review report prepared by the National Assembly's Culture, Sports and Tourism Committee on the bill introduced by Lim, the Fair Trade Commission said it agreed with the legislative purpose of shared growth in the film industry but raised the view that restricting OTT services until 6 months after theatrical screenings could pose a high risk of limiting competition.

It said restricting the supply of OTT services could narrow the range of products and providers and reduce consumer welfare. The Korean Film Council also presented the view that a cautious review is needed on setting a uniform holdback period by law.

In particular, the council said small and mid-sized films need to recoup investment through follow-on distribution such as IPTV or OTT services after theatrical release, and a longer holdback could instead reduce profit opportunities and potentially dampen production. It also said the approach could constrain distribution strategies already formed in the market for big-budget films, such as simultaneous screenings in cinemas and on IPTV and advance sales to OTT platforms.

Positions also differ within the film industry over an appropriate holdback period. The cinema sector says a certain level of holdback is needed to maintain cinema revenues and a virtuous cycle of film investment. Production and distribution sectors, however, say distribution strategies need to be flexible depending on a film's scale and box-office performance.

Overseas, cases of setting a uniform holdback period by law are limited. The Korean Film Council said that unlike some countries such as France, major film markets including the United States, Britain and Japan adjust release timing flexibly through industry negotiations.

A film industry official said it is necessary to first examine whether applying a uniform holdback would actually help improve the video content industry, adding that the reasons major overseas markets leave it to industry autonomy rather than legislation also need to be reviewed. The official added that holdbacks are not only an issue for production companies, cinemas and OTT services but are directly linked to the choice of audiences who actually consume films, and said the direction of the system should be decided after sufficiently reflecting consumer opinions.