by ZHANG Youfa

At the opening forum of the 27th Shanghai International Film Festival, Enlight Media chairman Wang Changtian said it was time for China's film industry to "restart and rebuild" its place within the wider cultural economy. He noted that the influence of cinema has waned in recent years, requiring a reassessment of the medium’s role and direction.

That view was echoed by several participants, who discussed the need to rethink production volume, talent development, and the industry's financial model in response to changing market conditions.

The mixed signals in China's 2025 box office underline the challenge. On one hand, Nezha 2 has topped the global annual box office with 15.4 billion yuan in ticket sales. On the other, national box office in May reached just 1.7 billion yuan, down 1.2 billion yuan from a year earlier. Earlier in the year, the Spring Festival box office also fell short of expectations, despite a rebound in overall holiday consumption.

“China has over 80,000 cinema screens,” said Wanda Pictures chairwoman Chen Zhixi. “The key is how to align content supply with that level of infrastructure.” She pointed to a growing mismatch between screen volume and effective film output, a concern raised at last year's festival by director Jia Zhangke, who questioned the productivity of individual screens.

While short-form video platforms have often been cited as competitors, Damai Entertainment CEO Li Jie suggested the broader issue is competition for consumers' limited leisure time. "It's not just online video—it's all offline entertainment that pulls viewers away from cinemas," he said.

During the May Day holiday, movie ticket revenue totaled 750 million yuan, while domestic tourism spending surpassed 180 billion yuan, according to government data. Li argued that the core issue is not demand but supply. "Nezha 2 proved that large-scale audiences still exist. Viewership depends on content quality," he said, citing data showing that audience expectations rose further after the film's release.

Wang also noted that expectations have impacted box office performance. "The same film today might generate only 40–50% of what it could have made a few years ago," he said.

In Chen's view, this shortfall in content partly stems from a production gap. As leading directors such as Guo Fan and Wen Muye pursue more complex, resource-intensive projects, the pace of new releases has slowed. Meanwhile, younger filmmakers have not yet filled the gap.

Rising production costs have compounded the issue. "Ten years ago, we made Jianbing Man for 12 million yuan. Today, even 120 million might not be enough for a comparable film," said Chen. Yet cost inflation and declining audience numbers are unfolding on different timelines. "Many ongoing and upcoming productions still carry budgets based on the previous era’s market assumptions," Li added.

He also noted that marketing practices are being reevaluated. Traditional roadshows and online promotion, including short video, are under renewed scrutiny for their return on investment.

In terms of financing, panelists acknowledged pressure on capital flows. With limited external investment entering the industry, film companies have had to rely heavily on box office revenue. Li estimated that 60–70% of productions face a risk of losses, which has led to a 10–20% annual drop in available internal capital.

Wang said some productions are now encountering funding gaps mid-shoot. "Overall industry losses may exceed 10 billion yuan annually, and in some years even more," he said.

Despite these pressures, panelists urged a constructive reset rather than pessimism. Li suggested that the path forward lies in better cost control and technological adoption, such as virtual production and AI tools. Damai now requires that at least 30–40% of its films utilize virtual sets to reduce location expenses.

Wang argued for more targeted output. "At the peak, China produced over 1,000 films a year. The market may only need 500 or 600, if done well," he said. He also called for rebalancing the profit-sharing structure, noting that producers typically receive only about 33% of gross box office revenue after distribution and marketing costs—a figure that makes it difficult to sustain reinvestment.

He further suggested that Chinese films diversify their revenue streams. "Internationally, box office contributes about 30% of a film's income. In China, it's over 90%, and sometimes as high as 95%," Wang said. "That level of dependence is risky."

By comparison, Nezha 2 has demonstrated the commercial potential of film-based intellectual property. Wang estimated the film's merchandise revenue could reach tens of billions of yuan. He acknowledged, however, that Enlight Media still has much to learn in building out licensing and retail partnerships. "Right now, the main gains are going to the sales platforms," he said.

Going global is another key avenue. Nezha 2 is projected to earn over US$100 million in overseas markets, a potential milestone for Chinese animation. Wang believes such films can help fill the cultural space once occupied by Hong Kong cinema in the global market.

Yet both Wang and Chen agreed that deeper reform must begin with talent. "Understanding how to connect with audiences should be part of every film student’s education," said Chen, adding that many new directors are not adequately trained to tell stories that resonate locally, even when equipped with advanced techniques.

Li ended on a cautiously optimistic note. "The global film industry has always moved in cycles," he said. "There's every reason to believe another high point will come—if we're willing to adapt."