Korea’s Lotte & Megabox Cinema Chains Announce Merger Amid Slow Recovery of Key Market

In a move that is poised to reshape the South Korean movie exhibition industry, two of the country’s leading cinema operators—Lotte Cinema and Megabox—are set to join forces. Retail conglomerate Lotte Group announced that Lotte Cultureworks and Megabox Joongang, parent companies of Lotte Cinema and Megabox respectively, have signed a memorandum of understanding (MOU) for a strategic merger.

Why Merge Now?

South Korea’s once-thriving box office has encountered hurdles in its post-pandemic recovery. While certain films have performed solidly, overall moviegoing rates remain below pre-pandemic levels. The planned merger seeks to address these challenges by combining resources, reducing duplicate expenses, and offering a more robust theatrical experience that can compete with streaming platforms (OTT).

Combined Footprint and Strategy

Currently, CGV leads the Korean exhibition market with 1,346 screens (2024 data), followed by Lotte with 915 and Megabox at 767. Once Lotte and Megabox finalize their merger, they are expected to surpass CGV in sheer number of screens, creating a local industry heavyweight.

In its announcement, Lotte Group noted that merging the two cinema chains is “a strategic decision to promote sustainable growth and strengthen customer-centered services in a rapidly evolving content environment.” The combined entity plans to:

Streamline Operations: Leverage the operational know-how and marketing strengths of both companies, cutting redundant costs.

Enhance Customer Experience: Invest in premium or specialized theaters that distinguish themselves from at-home streaming, and use newly secured funds to improve service quality.

Bolster Financial Stability: Pursue new investment opportunities to ensure long-term growth and profitability.

Regulatory and Next Steps

Before the merger can proceed, South Korea’s Fair Trade Commission must review and approve the union. Both companies aim to expedite this process and secure any necessary external funding as quickly as possible.

“A key objective of this MOU is to combine our strengths in order to boost business competitiveness and financial stability, while offering customers a more differentiated cinema experience,” a Lotte official said. “We hope the merger will have a positive impact on the entire film industry, from expanding the diversity of content to enhancing audience services.”

If the deal closes, the newly formed exhibitor will be uniquely positioned to navigate current market challenges, seeking to reinvigorate Korea’s theatrical sector and potentially influence broader trends in the global cinema landscape.