[비즈한국] CJ CGV079160's newly launched mobile app is facing harsh criticism from users. Critics point out that customer benefits have decreased and usability has worsened compared to the previous app. With its competitors Lotte Cinema and Megabox deciding to merge, CGV is at risk of losing its top market share position, and concerns are being raised that this app reorganization could further encourage customer churn.
System overhaul involved shutting down all theaters, but the result is 'harsh criticism'
On the 14th, CJ CGV shut down all branches nationwide for the first time since opening to embark on a company-wide system overhaul. The company completely replaced its mobile app with a new version while simultaneously upgrading and replacing on-site equipment at its theaters.
CGV emphasized that this system overhaul is the core project of its 'NEXT CGV' strategy. NEXT CGV is a mid-to-long-term growth vision proposed by Heo Min-heui, the CJ Management Support Representative, during his tenure as CEO of CJ CGV in 2023. It embodies the concept of evolving CGV into a complex cultural space that provides "experiences beyond just watching movies," in line with changing viewing trends and the digital environment.
Industry insiders say that CGV put significant effort into the process, including preparing for the system renewal since last year. However, customer response to the new system, which was unveiled amidst high expectations, is cold. CGV launched the new mobile app on the 15th, but it has been flooded with negative reviews from customers. Users point out that the app is more inconvenient than the previous version due to recurring errors and significantly lower usability. Protests and criticisms regarding the new app continue to appear on CGV’s official social media channels.
One user commented, "I understand that there might be minor errors since it's the initial launch, but the overall usability is designed to be much worse than before. In the process of the app overhaul, the accumulation and discount benefits that customers previously received have also been significantly reduced." They added, "I had high expectations because CGV announced a major system overhaul to the point of sacrificing business days, but the result is very disappointing."
CGV stated that it would reflect customer complaints and make improvements. A CGV official said, "This app reorganization is a strategic investment to improve customer convenience," and added, "It may take some time for things to stabilize, but we are taking various measures. We will make improvements quickly so that the same benefits and services as before can be provided."
CGV, which has maintained its position as the number one multiplex operator in Korea, is facing growing anxiety. In the first half of this year alone, it closed major theaters in Songpa, Yeonsu Station, Gwangju Terminal, Changwon, and Cheongju Yulryang. Last month, it also shut down 'Cine Shop,' a store specializing in movie merchandise that operated in Yeongdeungpo and Gwanggyo. Although Cine Shop had maintained only offline stores after ending online mall operations last year, it appears that the offline business was also scaled back due to worsening profitability.
CGV stated, "We tried new things such as the movie merchandise business, but there were areas where customer demand was not high. There was also a burden in terms of operations, so we decided to close some branches as part of a 'select and focus' strategy," adding, "However, we are not completely withdrawing from the Cine Shop-related business."
Lotte Cinema-Megabox merger: What is CGV's strategic response?
The domestic multiplex market is on the verge of major changes. This is because the industry’s second and third-ranked players, Lotte Cinema and Megabox, are preparing to merge. It means the long-standing "Big 3" competitive landscape is being reorganized into a "duopoly."
Lotte Cultureworks, which operates Lotte Cinema, and Megabox JoongAng, the operator of Megabox, signed a memorandum of understanding (MOU) for a merger in May. The two companies are pursuing a large-scale M&A that involves not only combining the theaters of Megabox and Lotte Cinema but also merging their film investment and distribution arms, Plus M Entertainment and Lotte Entertainment. A Lotte Cultureworks official said, "We expect synergies in theater operational efficiency and content investment."
The theater industry has suffered from worsening performance due to a continuous decline in audiences after the pandemic. In particular, as the OTT market expanded, movie releases were increasingly made available on OTT platforms shortly after their theatrical debut, leading to comments from audiences that the reason to go to a movie theater had disappeared. An industry official said, "The film industry is in a really difficult situation right now," and added, "Although Lotte Cinema and Megabox are explaining that the purpose of the merger is to expand new businesses, it looks like they are forced to consolidate in order to survive."
Currently, JoongAng Group’s Contentree JoongAng036420 holds a 95.98% stake in Megabox JoongAng, while Lotte Group’s Lotte Shopping023530 holds an 86.37% stake in Lotte Cultureworks. Once the merger is complete, the two companies plan to launch a merged entity that will be jointly controlled by investing stakes in equal proportions. A JoongAng Group official explained, "It will be in the form of both companies investing capital to create one new merged entity," and added, "We plan to create a joint investment entity and operate the company with joint ownership."
It is highly likely that the merged entity will introduce a new theater brand rather than Lotte Cinema or Megabox. The aforementioned official said, "Whether the existing brand names (Lotte Cinema, Megabox) will be maintained or changed will be decided after the corporate combination review is finished and the merged entity is launched."
There are predictions that once the merged entity launches, it will threaten CGV's market dominance. According to the Korean Film Council, the number of theater screens nationwide last year was 1,346 for CGV, 915 for Lotte Cinema, and 767 for Megabox. If Lotte Cinema and Megabox merge, they will secure a total of 1,682 screens, surpassing CGV's screen share. Even if they close some theaters in overlapping commercial areas, there are forecasts that they will surpass CGV in terms of market share.
A CGV official said, "We view the competitors' merger as a choice to overcome the crisis in this difficult situation. We believe that content and technology will ultimately be the competitive edge, and we will focus on those areas," adding, "We plan to move in a direction such as investing in facilities to create an environment where people have no choice but to visit the theater more often."