[Edaily Starin YUN GI BACK Reporter] The merger between Lotte Cinema and Megabox, which had been expected to reshape the domestic theater industry, has ultimately fallen through. With the “cinema mega-deal”—which had been seen as a breakthrough for the cinema industry, which had been in a slump since the COVID-19 pandemic—now scrapped, both companies have opted for independent survival strategies rather than pursuing economies of scale. Industry observers predict that, as the cinema market enters a recovery phase, the competitive landscape will shift toward strengthening content and venue competitiveness rather than simply expanding scale.

According to a filing by Lotte Shopping on the 1st, Lotte Cultureworks and Contentree Joongang have suspended related procedures following the expiration on the 30th of last month of the Memorandum of Understanding (MOU) to pursue a merger signed last year. The merger between the two companies, which garnered attention last May as the largest merger and acquisition (M&A) in the film industry, has effectively been called off after just over a year.
Industry observers believe that the financial crisis at Joongang Group and the initiation of rehabilitation proceedings for Contentree Joongang were the decisive factors behind the merger’s collapse. Analysts note that growing management uncertainty created an environment that made it difficult to continue negotiations.
Had the merger gone through, the landscape of the domestic multiplex market could have changed significantly. According to the Korean Film Council, as of 2024, the domestic cinema market share (based on the number of screens) stands at 43.8% for CJ CGV, 29.8% for Lotte Cinema, and 24.9% for Megabox. A simple sum of Lotte Cinema and Megabox’s market shares would total 54.7%, surpassing CJ CGV. While there were high expectations that the merged entity could secure a competitive edge in terms of nationwide screens and audience base, the merger’s collapse means the three-way competition among CGV, Lotte Cinema, and Megabox is expected to continue for the time being.

◇“Competitiveness” Over “Scale”… Differentiation Is the Key to Survival
However, many in the industry believe that the collapse of the merger does not necessarily mean a weakening of competitiveness. This is because, as the theater market gradually recovers, what ultimately determines success is not scale, but the competitiveness of the content and services that draw audiences to theaters.
In fact, Lotte Culture Works, which operates Lotte Cinema, successfully returned to profitability in the first quarter of this year, posting an operating profit of 7.9 billion won. While improving the viewing experience by expanding premium special theaters—such as recliner seats and “Gwang-eum Cinema”—and introducing the latest projection and sound systems, the company is also accelerating efforts to secure its own intellectual property (IP) and expand its live performance content business. The company is also exploring revenue streams outside of theaters, such as co-producing musicals and expanding its performance brands overseas.

For Megabox as well, while normalizing business operations following its restructuring is the top priority, the company is continuing its strategy to differentiate itself through content and the viewing experience. Following the conversion of its Hongdae location into the first animation-specialized theater among domestic multiplexes, the company is also expanding its Dolby Atmos-equipped theaters to enhance its unique viewing experience. The strategy is to secure a competitive edge by prioritizing content and specialized theaters rather than simply increasing the number of screens.
Some industry observers predict that the collapse of this merger will fundamentally change the very nature of competition in the theater industry. A film industry official stated, “While competition based on scale—such as the number of screens and market share—was important in the past, going forward, competitiveness will hinge on how well companies can differentiate the audience experience through special theaters, original content, and performances and events.” The official added, “Although the merger—a high-stakes move—has fallen through, a ‘every man for himself’ competition, in which companies seek survival by leveraging their respective strengths, will now begin in earnest.”