Soon at a Theatre Near You: Lee Eun-gyo oversees Lotte’s foreign expansion

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With Korea’s exhibition market slowly but steadily approaching maturity, it was a logical step for Lotte Cinema to seek expansion abroad. The first two markets where the company set up shop were Vietnam in 2008, and China in 2010. Those decisions were not taken lightly, though, but underwent careful and extensive considerations. “We had to take a holistic approach, considering the growth potential of the Chinese and Vietnamese film markets, the competition among local business entities, local laws and regulations applicable to foreign investors, and long-term strategies for opening new theatres for each country,” recalls Lee Eun-gyo, executive managing director of Lotte Cinema’s international business division, adding that the company applied a lot of trial and error as it went along.

A particular challenge in China was to negotiate with the local joint-investment partners in order to reach an agreement regarding the cinema business and operating plans. The country was divided up into three business areas, where Lotte Cinema jointly manages and administers the currently 13 locations with their combined 96 screens together with the respective partner company. By comparison, for the earlier foray into Vietnam, Lotte Cinema invested jointly with only one local theatre partner and is by agreement the sole operator of these venues.As of December 2017, there are 33 Lotte Cinema locations in Vietnam, boasting a total of 150 screens.

In terms of theatre saturation, Vietnam is still relatively underdeveloped. Lotte Cinema thus pursues significant quantitative growth by aggressively opening up new theatres. But according to Lee, there also will be qualitative growth through film distribution and production. “We are going to provide theatre access to as many people as possible by continuously establishing new venues in major as well as provincial cities while contributing to the development of the Vietnamese movie industry by offering high-quality content through our film distribution and production business.”

In the case of China, a market with strong local competition, the company plans to drive growth by implementing efficient marketing strategies and opening new theatres tailored to each area in cooperation with the local business partners. “Also, we will improve our brand awareness in the country by constructing landmark theatres in each city,” Lee adds. One of these landmark theatres is already operational in the city of Shenyang, offering 16 screens and 3,191 seats.

Meanwhile, the company has also begun implementing some of the exciting state-of-the-art screening technology in Vietnam for which it has already become renowned back home in Korea. For example, a giant SuperPlexG screen theatre was inaugurated at Lotte Cinema’s Go Vap branch in Ho Chi Minh City in 2016. And the Southeast Asian country’s very first LED cinema screen is scheduled to see the light of day sometime in early 2018—a move that doubtlessly will earn front-page headlines in local newspapers.

In 2016, revenues from China and Vietnam accounted for a very respectable 13 percent of Lotte Cinema’s total revenue and the company anticipates this figure to increase to 15 percent for the current year, according to Lee.And as 2017 draws to a close, the company has already announced plans for yet another foreign expansion, this time into the Indonesian theatre market, expected to happen within the next few months. “Indonesia is the world’s fourth most populous country and we believe that its film market holds significant growth potential,” says Lee, who was instrumental in formulating the expansion plan, drawing on his extensive foreign business experience. As he correctly observes: “Cinema culture is no longer confined within national borders.”

“I feel personally very honored that Lotte Cinema was awarded with CineAsia’s Special Achievement Award this year. It made me realize that the many hours the employees of Lotte Cinema spent in the past 20 years—consistently striving to improve the Korean movie market and providing customers with high-quality service and a better theatre environment through the active introduction of new technologies and challenges—was more than worth it. To me, this award is a reminder to become more modest going forward and to feel more responsible.”—Lee Eun-gyo