Quality IP as a Key Competitive Driver in Film Investment Market

Lighthouse Professional Edition data shows that as of 5:00 PM on March 16, the box office for “Flying Tiger 3” has reached 4.242 billion yuan. Multiple platforms predict that the final box office for “Flying Tiger 3” may reach 4.382 billion yuan. Based on this calculation, “Flying Tiger 3” will surpass “Avengers: Endgame,” which had a box office of 4.25 billion yuan, to become the tenth highest-grossing film in Chinese film history. Co-producer Enlight Media has benefited significantly.

Additionally, as of March 16, a total of 13 Chinese films have surpassed 4 billion yuan at the box office. Besides “Wolf Warrior 2” (2017), “Nezha” (2019), “The Wandering Earth” (2019), and “Avengers: Endgame” (2019), the remaining nine films that broke 4 billion yuan were all released after 2020, indicating that the ceiling for Chinese film box office continues to rise.

Changes in the rankings of the box office charts also reflect the competitive landscape of the domestic film market. Among these 13 films, Enlight Media, with the “Nezha” IP, has become the undisputed biggest winner with two films. Chinese films participated in nine of these movies, effectively diversifying investment risks.

However, the film investment market has mixed sentiments. For example, Beijing Culture enjoyed great success before 2020 with “Wolf Warrior 2” and “Hi, Mom,” but in the past five years, few blockbuster hits have emerged.

As a major winner, Enlight Media’s previous hit “Nezha: The Devil’s Birth” earned 5.035 billion yuan, topping China’s box office charts. Its sequel, “Nezha 2,” with a box office of 15.446 billion yuan, broke Chinese and Asian box office records and again ranked first in China.

Although the company did not disclose specific earnings from these two films in its annual report, estimates based on publicly available data suggest that Enlight Media earned about 4.1 billion yuan from box office revenue alone.

In addition, derivatives of the “Nezha” IP continue to generate steady income. Enlight Media President Wang Changtian previously stated that by 2025, sales of “Nezha 2” derivatives had reached hundreds of billions of yuan, with future projections exceeding one trillion yuan. He also mentioned that the overall economic contribution from “Nezha 2” could surpass 200 billion yuan.

According to Enlight Media’s latest financial report, in the first half of 2025, the company’s film and related derivative business revenue was 3.102 billion yuan, accounting for 95.67% of total revenue.

A domestic animation producer told Securities Daily that the advantages of animated films are becoming increasingly apparent. First, IPs have a long lifecycle and high long-tail value. Live-action films rely on actors, with sequel costs and actor fees rising exponentially. In contrast, animation IP assets are digital; characters do not “go out of fashion” or “increase in price.” The costs of producing sequels decrease, while brand effects and fan bases continue to grow, with marginal costs decreasing and marginal returns increasing. Second, derivative product development has natural advantages. Animated characters are perfect licensing assets. A successful animated film’s derivatives often boost box office revenue, creating a “content + consumer” dual-driven business model that is difficult for live-action films to match.

If companies cannot break through with a single hit like Enlight Media, broad strategic deployment is also an important way for enterprises to establish themselves in the film investment market.

For example, Chinese films have achieved investment coverage of the nine films mentioned above that surpassed 4 billion yuan. A review found that most of these are IP-based works, such as “The Battle at Lake Changjin,” “The Wandering Earth,” and the “Detective Chinatown” series. IP has become one of the key means for Chinese films to maintain stability beyond 2020 and to establish a foothold in the market.

“Film is a high-risk business, and a strong IP, such as the ‘Nezha’ series or the ‘Detective Chinatown’ series, forms the basis of market consensus. It can reduce marketing costs for new films and lock in a core audience at the moment of release, which is crucial in investment evaluation,” said Yang Huaiyu, senior researcher at Shanghai Summer Solstice Consulting Management Co., Ltd., in an interview with Securities Daily. He added that high-quality IPs have the ability to transcend cycles. Re-releases, sequels, or reboots of classic IPs can often stimulate the existing market during slow periods, serving as an important indicator of a company’s risk resistance.