Lotte Cinema and Megabox, which rank as the second and third largest cinema chains in South Korea, are considering merging due to challenges faced by the nation’s film projection sector struggling to bounce back from a significant drop in viewership. This downturn has been largely attributed to the increasing popularity of streaming services such as Netflix.
On May 8, both Lotte Group and JoongAng Group declared that they had entered into an agreement to combine their movie divisions, specifically Lotte Cultureworks and Megabox Joongang.
Lotte Cultureworks manages Lotte Cinema, the film distribution company Lotte Entertainment, and the Charlotte Theatre. Meanwhile, Megabox Joongang oversees Megabox movie theaters, Plus M Entertainment (which invests in and distributes films), along with Playtime Joongang, an operator of children’s amusement parks.
As reported by the Korean Film Council, Lotte Cinema had 915 screens and Megabox had 767 in 2024. Should they merge, their joint operation would exceed CGV, which currently leads the market with 1,346 screens.
This merger highlights the increasing challenges faced within the theater sector. Despite South Korea’s OTT content market experiencing an 11% growth in 2024, the traditional cinema market—which includes both box office earnings and advertising income—decreased by 5.5%. Notably, during the initial three months of 2025, box office revenues plummeted by 33.6% compared to the previous year, accompanied by a decline in moviegoers by 32.6%, totaling just under 20.82 million attendees.
Both businesses have faced challenges in maintaining financial stability. Last year, Lotte Cultureworks experienced a decline of 19.6% in revenues, whereas Megabox Joongang reported operational deficits for five years running consecutively.
The firms stated that the merger intends to bolster their primary cinema and movie operations while also seeking out fresh prospects. Nonetheless, doubt persists regarding the agreement’s influence, considering the sector’s significant move towards non-traditional screening venues.
Rather than pursuing a takeover, both companies intend to co-manage a newly consolidated entity. As stated by an industry source: “Given how much viewer behavior has shifted in recent times, it remains uncertain what level of synergies could be achieved through a union of the second and third largest players.”
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