In 1992, as South Koreans looked towards a new future without their hated military government, the local film industry found itself at a similar crossroads. On the one hand, changes in the political sector were promising the birth of a freer society. For socially conscious film-makers, such as Jang Sun-woo (Chang Sŏn-u), Park Kwang-su (Pak Kwang-su) and Im Kwon-Taek (Im Kwŏ n-t'aek), this meant a new-found freedom to explore themes and ideas that had been banned for decades. In the coming years, films such as Park Kwang-su's To the Starry Island (Kŭ sŏme kago ship'da, 1993), which touched on atrocities committed during the Korean War (1950–53), and Jang Sun-woo's A Petal (Kkonnip, 1996), concerning the 1980 Kwangju massacre, would put a new perspective on Korean history and society.

Nonetheless, in 1992 film producers and investors housed in the offices of Ch'ungmuro (a street which formed the Korean film industry's traditional hub, and a byword for the industry) were gripped with the fear that local cinema was about to vanish. Many film companies were going out of business. The percentage of ticket sales accounted for by local films was reaching all-time lows (18.5 per cent in 1992, and 15.9 per cent in 1993). A lack of investors meant that fewer and fewer movies were being made. Most ominously, the local film market which, like that of China, had long enacted strong barriers to foreign imports, had just been forced open.