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The Pennsylvania State University The Graduate School College of Communications A COMPARATIVE STUDY OF THE U.S. AND KOREAN FILM INDUSTRIES: HISTORY, STRUCTURE, AND FINANCE A Thesis in Media Studies by Patrick D. Baxter © 2008 Patrick D. Baxter Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Arts December 2008 This thesis of Patrick D. Baxter was reviewed and approved* by the following: Krishna Jayakar Associate Professor of the Department of Telecommunications Thesis Adviser Amit Schejter Assistant Professor of the Department of Telecommunications C. Michael Elavsky Assistant Professor of the Department of Film-Video and Media Studies John S. Nichols Professor of the Department of Film-Video and Media Studies Associate Dean for Graduate Studies and Research *Signatures are on file in the Graduate School iii ABSTRACT This project is a comparative case-study of the U.S. and Korean (South Korea) film industries along historical, structural, and financial dimensions. The genesis of this thesis came through an overall fascination with the film industry globally as nations compete and cooperate with each other, as well as contend with the dominance of the U.S. film industry. It uses the industrial organization model focusing primarily on "market structure." Further, it applies A.J. Scott’s bipartite (major, independent) and tripartite (major, subsidiary, independent) models of the U.S. film industry. The analysis is mainly descriptive being informed by historical development. To elaborate on market structure, samples of studio/mainstream and independent films were collected in both the U.S. and Korean film industries. The samples were analyzed along production company affiliation, distribution affiliation, sources of funding, and other elements. Chapter one introduces the project and the research questions. Chapter two shows past literature related to this project and explains the case study methodology. It also explains the industrial organization model as well as A. J. Scott’s bipartite and tripartite models. Chapter three details the historical development of the U.S. film industry. It also describes and analyzes its structure bringing in the samples of major and independent films. As with chapter three, chapter four details the historical development of the Korean film industry. It also describes and analyzes its structure bringing in samples of major and independent Korean films. Chapter five analyzes the findings from chapters three and four, and compares the U.S. and Korean film industries. Finally, chapter six concludes the project discussing implications of the findings as it relates to cultural factors, economic factors, technological factors, and new modes of marketing. iv Similarities were found among the U.S. and Korean film industries regarding structure. There is similar consolidation with the ownership of large media conglomerates in the U.S. case, and chaebols (vertically and horizontally integrated multi-industry mega-corporations) in the Korean case. These similarities, however, have only come about since South Korea’s globalization policies after 1992. After 1992, the Korean film industry became increasingly similar to the U.S. film industry as it achieved major developments over a compressed period of time, especially with investment from chaebols. Differences were found mainly in government involvement where the South Korean government is much more involved with the film industry than is the U.S. government with its industry. v TABLE OF CONTENTS LIST OF TABLES ...................................................................................................................................viii LIST OF FIGURES ...................................................................................................................................ix ACKNOWLEDGEMENTS .......................................................................................................................x CHAPTER ONE .........................................................................................................................................1 Introduction .............................................................................................................................................1 Research Question ..................................................................................................................................4 CHAPTER TWO ..........................................................................................................................................6 Literature Review ...................................................................................................................................6 Past comparative film industry studies .................................................................................................6 Methodology ............................................................................................................................................8 Comparative case study method ...........................................................................................................8 Industrial Organization Model .............................................................................................................8 Bipartite and tripartite film industry models ........................................................................................9 Investigation of U.S. and Korean films: majors and independents .....................................................11 CHAPTER THREE ....................................................................................................................................15 The United States film industry: History ............................................................................................15 The Paramount case and television ....................................................................................................16 Pay television and home video ............................................................................................................20 The United States film industry: structures of affiliation in studio and independent movies .......23 Structure: the major studios ................................................................................................................23 Structure: subsidiaries and independents ...........................................................................................24 Consolidation ......................................................................................................................................26 Sources of funding ...............................................................................................................................29 vi Bipartite/tripartite models applied to the U.S. film industry ..............................................................30 Defining “independent film” in the U.S. film industry .......................................................................33 Investigating movie affiliations in the U.S. film industry ..................................................................35 Funding ...............................................................................................................................................38 More on independent film ...................................................................................................................38 CHAPTER FOUR.......................................................................................................................................40 The Korean Film Industry: History ....................................................................................................40 The Motion Picture Law .....................................................................................................................41 Relaxing of foreign movie import regulations ....................................................................................42 1992 and the segyehwa policy ............................................................................................................43 The ‘IMF Crisis,’ recovery, and venture capitalist investment ...........................................................45 The Korean Film Industry: Structure ................................................................................................46 Analyzing the structure of the industry ...............................................................................................46 Chaebol-affiliated major film companies ............................................................................................47 Non-chaebol conglomerate major film company ................................................................................51 Minor film companies: chaebol or otherwise .....................................................................................53 Hollywood majors in South Korea ......................................................................................................55 Korean Film Council funded projects/Independent Film ...................................................................55 Towards a comprehensive look at the Korean film industry: categories and definitions ...................58 Methods of funding .............................................................................................................................59 Revisiting Scott’s bifurcate and tripartite models as applied to the Korean industry