| Ne Zha: Demon Child Conquers the Sea is the biggest hit in the history of the Chinese movie business. The animated mythological epic, a sequel to a 2019 movie, has grossed more than $2 billion this year, which makes it not just the biggest hit of the year in its home country but the biggest anywhere in the world in 2025. The film was the pride of the country when it debuted during the Lunar New Year. Chinese TV channels, including state broadcaster CCTV, aired global-box office rankings live for 24 hours, fueling a nationwide frenzy as audiences flocked to theaters repeatedly to propel the film to new records. And yet, instead of celebrating the film’s success, industry executives in China are worried. The success of that one movie belies the poor performance by just about every other film. Ne Zha 2 accounts for nearly 50% of Chinese ticket sales this year. (A Minecraft Movie, the top-grossing movie in the US, has accounted for about 10% of domestic sales this year.) Even with the highest-grossing movie in Chinese history, industry revenue is down more than 12% from before the pandemic. Ticket sales have declined from a year ago in each of the last four months. This lopsided performance dominated the conversation at the Shanghai International Film Festival earlier this month, where Wang Changtian, founder of Enlight Media — the producer and distributor of Ne Zha 2 — warned that the local industry is at risk of permanent decline. His comments at the opening forum set the tone for the entire event. Leaders including Wanda Film President Chen Zhixi and the chief executive officer of Alibaba Pictures (now called Damai Entertainment) warned that the cost of making movies in China has surged 10-fold over the past decade. The industry needs to cut production in half to reduce the glut of product, executives said. “For the Chinese film industry to stay afloat, it has to reduce the overall production cost by half,” film critic Raymond Zhou said. A decade ago, it looked as though China was on the verge of eclipsing the US as the largest movie market in the world. Having spent many years learning from their peers in the West, local producers and exhibitors were pouring money into new films and theaters. The government helped fund this expansion to transform moviegoing into a core part of its culture. The number of screens in the country has more than doubled since 2015. There are now more than 80,000– the most of any place in the world. Doubling the number of screens in North America was considered a policy success by some Chinese officials. But demand hasn’t kept pace. Theaters that were 20% full before the pandemic are now only 5% or 10% full. Most need to reach at least 15% occupancy to break even. Chinese producers are entirely reliant on domestic box-office sales. About 95% of a film’s income comes from ticket sales, unlike in Hollywood, where merchandise, deals with streaming services, home-video sales and international agreements bolster earnings. Most Chinese producers keep only about one-third of the revenue after subtracting the cut taken by theaters and the cost of marketing. “Can we make good films with this return? I don’t think it’s sustainable,” Wang said. Some took this as a quiet call for lower industry taxes. Movie producers in China face the same challenges as those everywhere in the world. Audiences have many other ways to entertain themselves, including video games, TV, other kinds of live entertainment and short-form video. Sales of micro-mini dramas – bite-sized serialized stories — have already surpassed traditional box-office revenue in China. To revive the industry, the government has launched a “China Film Consumption Year” campaign, allocating 1 billion yuan ($140 million) in ticket subsidies. The government is also promoting new cinema experiences such as virtual reality zones. Wanda, which controls more than 10% of the national exhibition market, is attempting to reimagine theaters as immersive zones where fans go to buy merchandise promoted by influencers and pop stars. China could increase sales by importing more foreign films. It has reduced the number of US pictures showing in the market, and South Korean movies remain largely absent due to a long-standing “unofficial” ban over political disputes. However, more South Korean films could be approved thanks to a thaw in geopolitical tensions — so long as their themes align with Chinese sensibilities. Japanese films featured heavily at this year’s Shanghai festival — more than 50 titles — signaling regulatory openness. Last year’s top two foreign films in China were Godzilla x Kong: The New Empire, produced by Legendary Pictures, and The Boy and the Heron, created by Studio Ghibli. The biggest challenge for China’s domestic producers is that their biggest movies still don’t make any money outside of the home market. Ne Zha 2 had strong overseas potential with its visually striking animation, compelling characters and universal themes of family and friendship — elements reminiscent of Disney hits, Zhou said. But without an established global distribution network, breaking through internationally remains an uphill battle. The film has grossed tens of millions of dollars outside China, including about $20 million in the US – great for a Chinese movie, but paltry by the standards of most global blockbusters. In building protective barriers to nurture its domestic industry, China may now be confronting the unintended consequence of limiting its films’ global reach. “Chinese film has never really found a wide audience overseas,” said Zhou, who watched Ne Zha 2 in Houston at an AMC theater that didn’t even display a poster. The best of Screentime (and other stuff) | Apple delivered the goods | The car-racing drama F1 grossed $144 million worldwide thiis weekend, the biggest opening for an Apple original movie. Executives were worried a couple weeks ago when the forecasts looked soft, but the outlook picked up in the last few days. This is Apple’s first major theatrical release in more than a year, following the disappointing performance of Argylle, Killers of the Flower Moon and Napoleon. Hollywood has been waiting for the debut of F1 to see whether it would influence Apple’s movie strategy. Many business partners have worried Apple will stop spending so much on movies — and perhaps abandon theaters entirely — if it whiffed again. Apple has downplayed the significance of this film and publicly reiterated its commitment to putting movie in theaters. “This concept that theaters are going away, it’s not true,” Apple services boss Eddy Cue told my colleague Thomas Buckley. The company just closed a deal with Peter Chernin, who would like to put some of his movies in theaters. Yet it’s clear the movie matters to Apple. They got CEO Tim Cook to give an interview to Hollywood trade publication Variety. This opening doesn’t set this movie up to make a ton of money from its theatrical run given the cost. While the official production budget of F1 is $200 million, most news outlets put the number much higher. But Apple has released a high-quality, original movie that should have legs at the box office and on streaming. The positive buzz around the film will also pause the negative narrative that had been weighing on the company’s film studio. That is a win. The No. 1 TV show in the world is…Squid Game season 3. The top movie and TV show on Netflix right now both hail from South Korea. Good news, bad news for the NBAViewership of the NBA finals slipped from a year ago despite a seven-game series. The ratings for the full playoffs increased from last year. Deals, deals, dealsI plan to spend my week off bingeing new seasons of The Bear and Squid Game | 
