BEIJING — For someone who lived in China before the pandemic, the success of the animated film “Nezha 2” was more of an industry milestone than a surprise.

In 2023, just as coronavirus restrictions were lifted, domestic animation was gaining momentum, with hits like “Chang’an,” which retells the life of the Chinese poet Li Bai from the perspective of his friends. As the only animated film in China’s top 10 films of the year, it took in about $250 million, according to Maoyan box office data.

The production team behind “Chang’an,” Light Chaser Animation, works mostly out of an old white building on the outskirts of Beijing. The building has high ceilings, stairways that wind through the building, connecting multiple floors and rooms, and a gym.

When I visited this week, some animators worked on computers in the dark, racing against time to finish cinematic lighting effects for scenes in the film that will be released this summer. Others designed ancient Chinese robes, detailed eyebrows and reconstructed buildings.

“This place isn’t big enough anymore,” Yu Zhou, the studio’s president, said in Mandarin, which CNBC translated into English.

He said the 380-employee company needs to hire at least 100 more people next year to keep up with its new production schedule: releasing two films a year starting in 2026, compared with one a year currently. Artificial intelligence can only be a tool for now, he said. Light Chaser plans to move into its new office in the second half of this year.

The studio sticks to a three-year production plan for all the films it’s making. Yu said they try to imagine the future and whether 20 million to 30 million people will watch the film when it’s released. “Will this story be successful in three years?”

Yu said “Ghost Temple Strange Stories,” due to be released this summer, retells “Chinese ghost stories.” He said the studio is in talks with “mainstream Hollywood studios” about releasing the film in theaters overseas, including in North America, at the same time as it’s released in China.

Speaking about the studio’s appeal to global audiences, Yu said Light Chaser Animation’s Green Snake — a retelling of a Chinese legend partly set in a futuristic city — performed well on Netflix after its 2021 release, ranking in the top 10 non-English content for three weeks.

Among other animated titles in the works, video streaming company iQiyi is producing Mr. Zhong, which is expected to be released in China this year. The company’s senior vice president, Yaning, said Chinese animation has begun to break its “childish” image and is developing into an industry that is expanding into movie merchandise and games.

Recent history

Chinese animated films have only started to make a splash in the last decade.

“In the history of Chinese animation, there has never been a film like Big Fish and Begonia… This bold, thrilling fantasy adventure is unique in terms of Chinese animated films,” entertainment industry magazine Variety wrote after the film’s 2016 release.

The film was produced by Beijing Enlight Media. This year’s Ne Zha 2 is from the same producer as 2019’s Ne Zha 1 — which topped China’s box office that year.

Deep Sea, from Beijing studio OctMedia, won acclaim in early 2023 for its dreamy, pastel-hued depiction of a young girl’s journey to healing after being abandoned by her mother.

Liu Anxing, a manager at a cinema in Chengdu, told CNBC that while popularity doesn’t always translate into box office revenue, Ne Zha succeeded in part because it appealed to audiences of all ages. Liu said he’s proud of the achievements of China’s animation industry, but he doesn’t expect another blockbuster like Ne Zha to happen anytime soon — at least not until Ne Zha 3 is released in 2028.

Nezha 2 was released in China in late January as one of six films released over the week-long Lunar New Year holiday, which it accounted for half of the holiday box office, according to Maoyan. After its release in North America on February 14, Maoyan data showed that the film beat Pixar’s “Inside Out 2” to become the world’s highest-grossing animated film with box office revenue of more than 13 billion yuan (1.79 billion U.S. dollars).

Strategy and planning

Unlike Light Chaser Film and Television, which focuses on in-house production, the producers of “Nezha 2” rely on different studios. The director is from Chengdu’s Keke Cartoon, while Beijing’s Enlight Media is the main producer and distributor of the show. Chinese official media said that nearly 140 companies were involved in the production of the show.

State media also highlighted how government subsidies have helped support domestic animation from Chengdu to Qingdao. Beijing formulated a national plan in 2021 to “build China into a film power” by 2035, including a requirement to produce 50 films a year, each of which has box office revenue of at least 100 million yuan.

Jonathan Clements, author of “Animation: A History,” warned that the overproduction of films could bring unpleasant shocks to studios and investors. “Animation consumers themselves are a resource that needs to be carefully managed,” he said.

Clements added that unlike Disney blockbusters that have made more than $1 billion in multiple countries, Ne Zha 2 has done so largely because of sales in the Chinese market. “You don’t have to worry about whether your story, your characters or your attitudes will be shown in other countries.”

China’s plan also stipulates that domestic films account for no less than 55% of annual box office revenue.

After Hollywood movies were allowed into China, domestic audience interest gradually waned. Maoyan said Godzilla x Kong was the only movie to make the top 10 last year. Oppenheimer failed to make the top 20 Chinese box office in 2023, and Barbie lagged even further behind.

In 2019, Avengers: Endgame ranked third in the domestic box office rankings, behind Chinese sci-fi blockbuster The Wandering Earth and the first Ne Zha, according to Maoyan data.

Many Chinese animated TV series draw their characters and plots from stories created online by little-known authors. China Literature, the operator of a large user-generated content app, said 15 of the 20 most-watched web animation series in the first half of last year were adapted from content on its platform. In the past few years, the company has also begun putting adaptations on YouTube to expand its audience.

Chinese creators are also using generative AI for filmmaking. Short video streaming app Kuaishou is about to launch a seven-episode miniseries, “New World Installation,” which is mainly produced using the company’s Kling AI video generation technology. Director Chen Xiangyu said the team only needed to feed a simple script to the AI ​​model without drawing characters.
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