Just as the local cinemas seemed to be recovering from the monthslong slump caused by the COVID-19 pandemic, South Korean film distributor Merrychristmas Inc. announced that it was turning to crowdfunding platform Crowdy to fund its marketing budget of 300 million won ($254,000) for upcoming film Space Sweepers.

A relatively new company seeking crowdfunding for a large blockbuster was unprecedented, and more than 4,500 people signed up to be notified of the actual start of the crowdfunding campaign, an important marker in predicting a crowdfunding project’s success.

Read also: Song Joong-ki’s ‘Space Sweepers’ release shelved again

Space Sweepers recruits individual investors

Within five days of its crowdfunding campaign launch, Space Sweepers reached about two-thirds of the target amount. Then came a sudden resurgence of COVID-19 in the Greater Seoul area that soon spread to the rest of the country. Through the rest of August, the number of cinemagoers recorded new lows almost daily, and the public’s interest in the crowdfunding project quickly cooled. When the campaign closed Friday, it had reached 74 percent of its goal. A project is considered a success if at least 80 percent of the target amount is reached.

According to Chris Chung, chief operating officer of Merrychristmas, the company decided to push ahead with crowdfunding — not because of the COVID-19 pandemic, but despite it.

“We had been preparing for the project since January and the original plan was to raise the fund between April and May, because the initial release date of the film was late July,” Jung told The Korea Herald in a phone call.

The film’s release, already pushed back from late July to Sept. 23, in time for the Chuseok holiday season, was postponed once again last week after stricter social distancing measures came into effect.

“We started the project in search of a new way of financing films. We have been financing film productions through diverse means to hedge against risks. This time, we wanted to attempt a different method,” Jung said. Merrychristmas was established in 2018.

Space Sweepers, starring heartthrobs Song Joong-ki and Kim Tae-ri and regarded as Korea’s first original space blockbuster, was perhaps the most appropriate film with which to attempt crowdfunding, according to Jung.

Speaking with The Korea Herald on Saturday, Jung said, “It’s a bad time for any film to open in the theaters right now due to the worsening COVID-19 situation. But we are aware that there are many people who want to invest in the film, and hopefully we could proceed with the crowdfunding again when the film’s release date is set again.”

Read also: ‘Space Sweepers’ is not the usual sci-fi hero blockbuster

Viewers as shareholders

Independent or individual filmmakers have been using crowdfunding to finance their projects for quite some time. Taking the form of reward funding, investors typically contribute a small amount of money in return for promised goods in forms of presents, tickets or credit as an investor.

Crowdfunding has also come to be used as a means to promote films, notable among them a documentary film on late president Roh Moo-hyun, Our President (2017), and an investigative documentary film on the 2014 Sewol ferry disaster, Intention (2018).

More recently, commercial films have been turning to crowdfunding as a channel to promote and engage with audiences ahead of a film’s release as well.

South Korea’s largest crowdfunding platform Wadiz has been an active mediator for film crowdfunding. Last year, crowdfunding campaigns for three commercial films distributed by Lotte Entertainment —Kim Ji-Young, Born 1982, Forbidden Dream and The Divine Fury – were launched on the platform. Investors were issued bonds worth the amount they invested and are entitled to receive a share of the films’ profit according to the value of the bonds they hold.

Similarly, investors in Space Sweepers were issued bonds, but the individual investors in this case are entitled to the same rights over the film’s profit as the institutional investors. The minimum amount fundable through Crowdy is 500,000 won, and the film would generate a profit should ticket sales exceed 5.8 million admissions. While shareholders will be guaranteed a higher rate of profit if the film garners over 7 million tickets sold, they also bear the risk of loss if the film fails to reach the breakeven point.

According to Crowdy’s co-founder and managing partner Kim Ju-won, the 24 billion-won Space Sweepers is the first Korean commercial film of such a budget to attempt financing its marketing through crowdfunding.

“The filmmakers, whether companies, producers or actors, are inviting the general public and fans to share their property rights. They’ll be on the same boat and rather than being just an audience, they get directly involved in the film’s success,” said Kim.

Jung said Merrychristmas plans to continue crowdfunding campaigns in the future to set successful precedents that provide a new standard for the film industry as it goes through a difficult period.

“How people approach and watch movies is evolving fast, but I believe cinemas will not disappear completely, as there will be those films that people prefer to watch in such a space. And, crowdfunding will be an important means to understanding the changing trends, as it targets the general audience who can take part with a small investment,” Jung said.

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