Local consumers’ reception of imported and domestic movies in the Korean movie market

Abstract

We look into how local consumers receive foreign cultures embedded in imported movies against customized local cultures in domestic movies in the Korean movie market. We theorize that imported movies (mostly, American movies), which often have bigger budgets and superior moviemaking techniques, suffer from cultural discount in appealing to local (Korean) viewers. By contrast, homemade domestic (Korean) movies appeal to their own national market more effectively with customized cultural content (cultural categorization). Specifically, before movie release, imported movies tend to generate generally lower expectations because of local viewers’ cultural discount of those movies. Conversely, local domestic movies tend to generate generally higher but more polarized expectations arising from local viewers’ cultural categorization of the movies. These aspects lead domestic movies to perform better in theaters in the number of viewers and the movie’s life length. Imported movies, however, attain similar levels of viewer satisfaction because they have smaller and differentiated customer bases. Using multiple-source Korean movie data, we empirically support our theory. Finally, we discuss the practical importance of understanding and strategically utilizing these cultural issues from Hollywood studios’ perspective.