South Korean entertainment giant CJ ENM posted a deficit of more than 30 billion won in the second quarter of this year alone due to the slump in movies and TV series, it was revealed on August 10th. The company is a subsidiary of South Korea's CJ Group, and has worked on hit movies such as the movie 'Parasite', but it has recently been pointed out that its content competitiveness has declined.
The company announced on the 10th that it posted sales of 1.489 trillion won and an operating loss of 30.4 billion won in the second quarter of this year. Prior to this, the company recorded a deficit of 50.3 billion won in the first quarter of this year. The annual deficit is expected to far exceed 100 billion won at this rate.
The deficit is also affected by the slump in the advertising market due to the economic downturn, but the most serious problem is the slump in hit movies and TV series. Movie and TV Series operating losses reaches 31.1 billion won.
The company has been hit by a string of box office failures since the beginning of the year. The sci-fi movie 'The Moon', which was highly anticipated with a production budget of 28 billion won, failed in practice with only 410,000 viewers within 7 days of its release. This is less than half of the cumulative audience of 810,000 for the competing work 'Unofficial Operation' released on the same day.
The break-even point for 'The Moon' is about 6 million people. However, it seems likely that it will leave the theater without being able to exceed 1 million people. The loss is huge.
'The Moon' is the largest investment among Korean movies released this summer. Approximately 17.5 billion won was invested in the production of the competing work 'Smuggling', and about 20 billion won each in 'Unofficial Operation' and 'Concrete Utopia'. However, the number of spectators mobilized was not as good as rival works, and it was a tough result.
In addition to 'The Moon', CJ ENM's other promising works such as 'Ghost' and 'Count' released this year have failed one after another, and it has been pointed out that both artistry and commerciality are declining. This is why CJ ENM's crisis theory is rising.
The market is taking it as a shock. Concerns are mounting that the deficit is much larger than expected. Previously, the securities company forecasted a loss of 10 billion won for the second quarter of CJ ENM, and revised its price target from 140,000 won to 80,000 to 90,000 won. The actual deficit was much larger than this.
An industry insider said, “Multiple factors are affecting CJ ENM's crisis situation, such as the deterioration of advertising revenue due to the economic recession and the emergence of OTT (online video stream service)."
The outlook for the future is bleak. The deficit is expected to continue, and the problem will not disappear even after the worst phase. In recent years, CJ ENM's content has been rated as 'not attractive' and 'uninteresting' compared to competitors, and it has been pointed out that the content's competitiveness has declined. Some say that the time has come to resolve these fundamental issues.
Published : 2023/08/12 12:41 KST
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