China’s latest animated film Nezha has been all the rage in China this summer, beating out Zootopia as the most popular animated movie in the country’s history. 

In just three weeks, Nezha has taken in more than US$500 million at the box office. But while its massive success has whipped up a fervor within China, it masks a continuing struggle in the broader industry.

Nezha is a story about the son of a garrison commander who eventually commits suicide to save his people from the Dragon King’s rage. He is later reborn as a god. (Picture: Beijing Enlight Pictures)

There are high hopes for Chinese animation in the wake of Nezha. Yang Lei, vice president of Chinese animation studio Beijing Rocen Digital Technology, said at ChinaJoy that the success of Nezha might mean that the industry will have a breakout year. However, as a one-off hit, the movie hasn’t yet changed the reality facing Chinese animation.

While the glamor of Nezha has attracted a lot of attention, industry watchers said that most Chinese animated movies still struggle to make money.

As a whole, Chinese homegrown animated movies have yet to live up to expectations. According to CSC Financial, animated films have often accounted for just 6% to 10% of total box office sales, peaking in 2016 at 16%. The industry in the US fares better, making up 10% to 15% of the box office. In Japan, the number has been above 40% since 2015. 

No other Chinese animated films are coming close the kinds of numbers Nezha is seeing. Before Nezha came out, White Snake was considered the best Chinese animated film of the year, but it only made US$62 million at the box office. The Wind Guardians, one of the better known films from Yang’s Rocen Digital, only managed to snatch US$16 million at the box office.

In the US, five animated films have made more than $100,000 million so far this year at the domestic box office. This includes the photorealistic CGI remake of The Lion King, with more than $470 million, and Toy Story 4, which made more than $419 million.

One big problem facing further development of the industry is the lack of investment. China’s animation industry saw a boom year in 2015, when Monkey King: Hero is Back became a cinematic sensation in the country. This led to a lot of money pouring into the industry, but slowing economic growth in China has meant the money isn’t flowing like it used to.

In fact, only 15 animation companies in China received investment in the first half of this year, reaching about US$155 million. 

Yang said Nezha’s success is more of a miracle. The film’s production involved more than 20 animation studios in China and more than 1,600 people. 

Sounds like a lot of synergy, right? Yang had a different take. It attests to how fragmented the production line is with China’s animation industry, he said.

“Most of the time we just work on our own. We don’t have time to work with one another because we are struggling to survive,” he said, “I think the industry is on the cusp of integration. After that, we might just finally meet spring.”

Others believe that all the hot money leaving the sector might bode well for the industry in the long term. Liu Chenwei, co-founder of anime forum Banciyuan, said at ChinaJoy that the internet companies investing in the industry demanded animation companies turn a quick profit within a short period of time. The race for a quick buck didn’t allot animators the time needed to create good content.

“Internet companies’ product strategy often entails a low budget, quick iterations and lots of troubleshooting,” he said, “This just doesn’t fly in the content business.”

“Only after this capital leaves can we then pause to think with more composure,” he added. 

China’s biggest animated hits seem to be evidence of the fact that good content takes time. The director of Nezha spent two years on the script and it was in production for three years. Monkey King: Hero is Back was reportedly in development for eight years.

Interestingly, both films have themes of defiance, which seems to have resonated with many filmgoers in China.

But perception matters. Chinese animated films are still often seen as catering to younger audiences. Monkey King and Nezha featured some mature themes, though, allowing the films to appeal to people in different age groups the way many top-grossing American and Japanese animated films have.