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It’s Wednesday. Let’s get after it:

• South Korean Film Industry Investigates Box Office Manipulation 🔍

• Streaming Dominates as Linear TV Falls Below 50% 📡

• TSG Sues Disney Over Streaming Strategy 🪓

• Big Sequels Struggle with High Budgets and Box Office Changes 💰

Daily US Box Office: August 14, 2023 💸

South Korean Film Industry Investigates Box Office Manipulation 🔍

South Korean authorities have referred 69 officials from theater chains like CGV, Lotte, and Megabox, along with representatives from 24 film distributors, to the prosecutor without detention on charges of obstructing business. This move follows an investigation launched in June regarding suspicious box office numbers. The police allege that these individuals were involved in fabricating figures to artificially boost film rankings over the past five years.

Reports suggest that ticket sales for at least 323 movies screened in the market between March 2018 and June of this year were inflated. These allegedly falsely reported sales, especially on local titles, resulted in an overcount of 2.67 million viewers.

In June, police conducted raids on major exhibitors and the offices of three film distributors on suspicion of box office manipulation and obstructing the Korean Film Council's (KOFIC) business by inaccurately counting audience numbers for some local films.

Police claim that the accused theater officials, in coordination with film distributors, manipulated ticket sales data onto KOFIC's compiling service to boost film rankings at their cinemas. Methods of inflating numbers reportedly included purchasing large quantities of tickets for late-night screenings and holding "ghost screenings" without actual audiences.

KOFIC oversees box office data, including audience numbers and sales for each movie, through the Korean Box Office Information System. Multiplexes and film distributors report their box office numbers to this system.

During the investigation, police examined box office figures and ticket sales data for 462 films released by 98 companies. Allegedly inflated titles include "Emergency Declaration" (2021), "Endless Rain" (2021), and the documentary "The Red Herring" (2022).

What's coming? 🤔

Streaming Dominates as Linear TV Falls Below 50% 📡

In a noteworthy shift, the landscape of television consumption witnessed a significant transformation in July, as the share of linear TV viewing dipped below 50 percent for the very first time since Nielsen initiated its comprehensive tracking of TV usage by platform. While the overall landscape of TV usage exhibited a modest increase, the impetus for growth largely emanated from the realm of streaming, which soared to an all-time peak, accounting for a substantial 38.7 percent of the total TV usage pie. In tandem, the "other use" category, encompassing an assortment of activities such as video game play on TV screens and physical media playback, contributed 11.6 percent to the overall usage pattern.

Streaming's ascendant trajectory remains evident as its share of TV viewing time has now expanded for three consecutive months, making the ascent from 37.7 percent in June to the record-setting height reached in July. Conversely, traditional linear TV channels experienced a decline, with broadcast networks registering a mere 20 percent of the viewing share (down from 20.8 percent in June), while cable television stood at 29.6 percent (down from 30.6 percent). These figures delineate a substantial deviation from Nielsen's initial rankings in June 2021, when the combined share of broadcast and cable accounted for 63.6 percent of total TV usage, indicating a noteworthy shift to the current 49.6 percent.

The underpinning foundation of this seismic shift in TV consumption is the dynamic role played by key streaming platforms. YouTube held sway as the preeminent contender, leading the pack with 9.2 percent of total TV usage, closely trailed by Netflix at 8.5 percent. Other streaming services contributed significantly as well, with Fox's Tubi and Max both accounting for 1.4 percent of usage. An influential contributing factor to this paradigm shift was the prominent role played by the acquired series. For instance, "Suits" on Netflix and Peacock collectively garnered an impressive viewership of over 18 billion minutes in July. Another standout performer was Disney+'s "Bluey," which attracted an audience engagement of approximately 5 billion minutes.

Famous Birthdays on August 16th 🎂

TSG Sues Disney Over Streaming Strategy 🪓

Film financier TSG has taken legal action against Disney, filing a lawsuit in Los Angeles Superior Court that accuses the media giant of employing a range of creative accounting tactics to amass substantial profits. The lawsuit echoes a similar legal dispute involving Scarlett Johansson and the release of "Black Widow," asserting that Disney prioritized its streaming platform, Disney+, over traditional theatrical releases, which allegedly affected the financial interests of partners like TSG.

TSG, which has invested a significant $3.3 billion in backing around 140 projects at Fox, contends that Disney employed various strategies akin to what is colloquially termed "Hollywood accounting" to bolster its streaming service's revenues. Notable films in TSG's portfolio include hits like "Avatar: The Way of Water," "Bohemian Rhapsody," and "Deadpool."

At the heart of this legal dispute lies the distribution dynamics within the entertainment industry, a theme that closely mirrors the central argument in Scarlett Johansson's case. The lawsuit highlights the significant changes that have occurred in the film distribution landscape, particularly with the rise of streaming platforms and shifting consumer preferences. TSG claims that these changes have had negative financial implications for its role as a finance partner in various projects.

Beyond financial ramifications, the lawsuit provides insight into the ongoing transformation within the entertainment industry, where traditional distribution models are evolving to accommodate the surge in streaming consumption. This legal battle underscores the complex interplay between content creators, distributors, and financiers in the ever-changing landscape of modern entertainment. As the industry navigates these shifts, legal disputes like this one serve as critical markers of the ongoing challenges and negotiations shaping the future of media distribution.

Movies/TV Shows Released on August 16th 🎞️

Big Sequels Struggle with High Budgets and Box Office Changes 💰

High-budget sequels like "Indiana Jones and the Dial of Destiny" and "Mission: Impossible — Dead Reckoning Part One" are facing disappointing box office returns despite the appeal of nostalgia and action. While the global grosses of $375 million and $523 million, respectively, are decent, their massive budgets of around $300 million each plus marketing costs of $100 million have put them at risk of losing nearly $100 million. These films aimed at older audiences are contending with shifting viewing habits, especially with the rise of streaming.

The challenging profitability of these blockbusters is partially due to the evolving movie landscape driven by COVID-19, which has prompted the reevaluation of traditional revenue streams. Studios argue that the calculation of a film's profitability should also consider income from streaming and licensing deals, which can contribute significantly to returns over time. Disney's Bob Iger noted that the release of "Indiana Jones and the Dial of Destiny" sparked renewed interest in older "Indiana Jones" films on Disney+.

This financial struggle isn't unique to these two franchises. Even Universal's "Fast X," with a budget of $340 million and a global box office haul of $704 million, only marginally turned a profit. The current climate, including labor strikes and uncertainty in key markets like China and Russia, has made profitability even more challenging.

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