All is not well in the South Korean film and cinema industry, or rather, not as well as it had been for the past few years. South Korea has recently been on of those rare territories where local films outperformed Hollywood imports. But now things are in decline and the slump is based on illegal downloads (South Korea is one of the most wired countries in the world), as well as a decrease in creativity. From the Korea Times:

Over the first six months of this year, homegrown accounted for 41.6 percent of the market, marking the lowest figure in six years, according to data released by Samsung Economic Research Institute.

In addition, the number of movie tickets sold during the January-June period fell 9.1 percent from a year ago, Samsung said. The institute is a research arm of Samsung Group, South Korea’s biggest family-run industrial conglomerate.

Samsung attributed the decline to “a lack of creativity, sluggish exports and weak demand due to illegally-distributed movies on the Web.”

Losses from piracy in South Korea are expected to account for 40 percent of the total revenue in the nation’s film industry, Samsung said.

One of the reasons for South Korea’s domestic film success was the quotas imposed by the government, which have now been partially lifted. While quotas typically do not improve quality or performance of domestic films (think back to UK’s between-wars ‘quota-quickies‘), for a while it seemed South Korea bucked the trends with great and sometimes even award winning films like ‘Old Boy‘ and ‘Memories of Murder‘. Maybe partially contributing to the slump is lower demand from Kim Jong Il, ruler of North Korea and film fan extraordinaire, with a collection of over 20,000 foreign films and known to kidnap South Korean film stars. South Korea is also getting a large number of digital cinema installations but these seem to play no part (negative or positive) in cinema attendance yet.