Box-office smash highlights local animation industry's prowess, country's formidable culture
The China-made animated hit Ne Zha 2 exploded onto screens with the force of a "demon child" during Chinese New Year, raking in a staggering 14 billion yuan ($1.9 billion) at the box office.
The unprecedented success of the domestically made film boosted its production company's stock by a jaw-dropping 260 percent in eight trading days, and propelled sales of associated merchandise beyond hundreds of millions of yuan, sending factory operations into overtime to meet the booming demand.
The strong revenue generated by the film has sent a ripple through the entire film industry, showcasing the synergy between profitable intellectual property and the infusion of capital.
READ MORE: Ne Zha 2 tops global box office of animated films
From the Sichuan-accented exclamation of Taoist immortal Taiyi Zhenren's "Bashi de ban!" (How delightful!) to the grandeur of the East Sea Dragon Palace, Ne Zha 2 is a daring cultural reimagining.
On-screen, the film's protagonist defiantly declares, "If there's no path ahead, I'll carve one!" Off-screen, a coalition of 138 Chinese animation studios, ranging from industry giants to obscure contributors, united to chart a new path for Chinese animation.
Director Yang Yu, better known as Jiaozi, said that while international companies were initially considered to produce the movie's visual special effects, they fell short of expectations. "We instead opted to entrust local teams with refining the work," he said.
In Jiangxi province, Huanying Fengbao (Miragevfx) studio spent three months crafting the ethereal Yu Xu Palace dome effects, which include intricate circular patterns and the mesmerizing nectar water animations. The average age of the young animation team was 25.
In Shenzhen, Guangdong province, Fantawild Animation took the same amount of time to perfect the waterfall effects for a forest skirmish scene. To tackle the intricate scene, the animation team streamlined its workflows, used 50 high-performance workstations as a computational cluster, and conducted batch processing of simulation data.
"Each frame demanded 32 hours for rendering, totaling 15 days. Our aim was not just grandeur, but a rhythmic, aesthetically Eastern cascade," team leader Wang Weiwei said.
In an interview with CCTV, Jiaozi stressed: "We must craft visuals that astonish, that break new ground artistically and captivate aesthetically. Only then does the endeavor hold merit."
Awestruck audiences
This relentless pursuit of technical excellence left Wang Zheng, general manager of Mianyang Zhonghuan Culture Communications, a company that owns 10 cinemas, awestruck.
"Many viewers revisited the film to dissect fleeting visual effect moments," said Wang.
Before many screenings, tickets sold out within minutes. Some impatient international fans even went to nearby countries to watch the film.
In addition, hordes of fans of the movie traveled to real-world Ne Zha landmarks such as Tianjin's Chentang Pass and Yibin's Ne Zha Temple — rekindling interest in cultural tourism.
Zhang Feng from Beijing displayed a clutch of different ticket stubs for the film to illustrate his appreciation for different aspects of Ne Zha 2's high-end production value.
"IMAX 3D for its visual splendor, Dolby Atmos for musical immersion, 4DX for the 'wind-fire wheels' thrill," he said.
At the peak of Ne Zha 2's box office reign, Zhonghuan cinemas scheduled up to 140 daily screenings, Wang said. The off-peak cinema occupancy rate hovered at 50 to 60 percent while prime-time screenings were sold out.
The film accounted for 80 percent of Zhonghuan cinemas' daily box office earnings, he said.
"Our scheduling hinges on demand, occupancy, and revenue — Ne Zha 2 dominated on all fronts," he added.
"Although the average attendance rate for Ne Zha 2 dropped by 50 percent one month after its release, this still stands as a commendable achievement. This data not only reflects remarkably well on the domestic market, but also showcases a favorable decline rate when compared with imported animation films."
Wang said imported animation films often face a situation where, after one month, many theaters have either stopped screening them or only have occasional showings. "In contrast, Ne Zha 2 continues to be prioritized by theaters as a leading feature for screening," he said.
Go local, win global
As audiences wept during the movie's heart-touching scenes, investors rejoiced in its financial fortunes.
Ne Zha 2 boasted five production companies — three affiliated with Enlight Media and two linked to Jiaozi, information from data analysis company Beacon Pro showed.
With a reported budget of 500 million yuan, which included production and marketing, industry insiders estimated that Enlight could reap over 2 billion yuan from a 10 billion yuan box office haul. After Spring Festival, Enlight's shares surged, adding a remarkable 72 billion yuan to achieve a 100 billion-yuan market value.
Professor Chen Shaofeng from Peking University, also a former independent director at Enlight Media, hailed the film as a watershed moment in animation commercialization. "China's director-centric model diverges from Hollywood's producer-driven paradigm, yet recent market shifts offer enhanced protection for investor returns," Chen said.
In the end credits, Ne Zha 2 recognized 135 companies in various categories such as co-production, production teams, art services, digital assets, visual production, and animation production. Of these enterprises, 115 were classified as small and micro-sized ones.
"The nature of outsourced work in this specific visual effect field dictates the absence of large enterprises," Chen said.
"As entities that do not participate in film investment but solely engage in production, outsourced parties have minimal connection to the post-film profits. It is truly the combined efforts — which come from the enthusiasm for the animation industry of these participating companies — that have propelled the film forward, paving the way for a more mature development of Chinese animation," he said.
Sales of products associated with Ne Zha 2 have shone as brightly as the film itself.
"Almost all the goods that were brought in were sold out well before the second day of the Chinese New Year," said Wang of Mianyang Zhonghuan. "The daily sales revenue of Ne Zha 2 products accounted for approximately 20 to 30 percent of the cinema's non-ticket revenue."
He added that there had been some product supply shortages, mainly due to inadequate forecasts of demand for the products, a situation that was compounded by logistical issues during Spring Festival.
Sales of authorized Ne Zha series merchandise on Taobao's platform have surpassed 50 million yuan, according to data from the online retailer. The range of products includes blind boxes, trading cards, plush toys, resin dolls, film cards, fridge magnets, badges, stickers and dozens of other items, with sales continuing to grow.
On Jan 30, Pop Mart released the Ne Zha-themed series of blind box figurines on its Tmall official store. With over 20,000 people searching online daily, the sales quickly exceeded tens of millions of yuan within eight days of the launch, becoming a hard-to-find item.
Qin Lang, who is in charge of trendy toys at Tmall, said the blind boxes are restocked irregularly, and daily inquiries from fans are still high.
At the Pop Mart store in Sanlitun, Beijing, the display case for the Ne Zha series of blind box figurines had a "sold out" sign recently. This series of blind box figurines includes eight regular designs and one hidden design, with a single item priced at 69 yuan and the full set at 552 yuan. Staff members said that only display items were available in the store, and restocking times are uncertain.
Official stores of the card game company Card. Fun have introduced new trading cards for the Ne Zha series. In just one week, over 700,000 cards in the series were sold, surpassing 1 million yuan in total sales. The limited-edition "Jiaozi director autographed" cards have become a favorite with collectors.
"The growth in searches and transactions for Ne Zha 2-related products is explosive, with over 100,000 more searches per day compared with the previous day. This kind of surge in sales for intellectual property merchandise is very rare in recent years. As the hottest IP of the year, we expect that this 'Ne Zha whirlwind' will continue for at least another month," said Qin from Tmall.
IP protection
In Yiwu's small-commodity market in Zhejiang province, an "unofficial merchandise" scene is unfolding. Merchant Chen Jianguo was proud to show "his achievements". He had replicated the Ao Bing mask in three hours, and the first 5,000 sold out within 48 hours.
"The official version sells for 199 yuan? My version is only 19.9 yuan with free shipping!" he said.
While Chen is proud of his product, the rampant growth in unauthorized products is causing headaches for copyright holders.
The challenges associated with merchandise piracy underscore the fragility of China's domestic animation industry. Despite advances in technical collaboration and product development, the Chinese animation sector still has ground to cover before achieving a "Disney-style ecosystem", said Chen Shaofeng from Peking University.
"For instance, Disney typically kick-starts IP development a year before a movie's release, supported by a robust legal team specializing in intellectual property," he said.
"They also strategically map out theme park expansions tied to their IPs. In the world of IP economics, box office earnings may only represent roughly 38 percent, with derivatives and theme parks occupying a major share of total profits, signaling a need for Chinese production teams to sharpen their focus on IP profitability," he said.
Meanwhile, locales associated with Ne Zha, like Yibin and Jiangyou, are steadily gaining prominence on the back of the movie's success. The hashtag #MultiplePlaces-CompetingforNezhaIP# has trended across various social platforms.
READ MORE: Ne Zha 2 wows audiences in global markets
Data from the online travel service Fliggy showed a notable surge in searches for Ne Zha-related destinations in the past week, with Yibin witnessing a 225 percent spike and Jiangyou skyrocketing by 453 percent. Searches for attractions such as the Ne Zha Nao Hai Water Park and Ne Zha Town have also experienced a significant upswing.
Ne Zha 2 has showcased the formidable impact of a top-tier IP. Nonetheless, as the hero's "My fate is determined by me, not by heaven" ethos resonates with audiences, the Chinese entertainment industry is considering how to ensure it is not a one-off success.
"Chinese filmmakers should embrace an industrialized system and hold content in reverence," Chen Shaofeng said.
