The three main themes of the Japanese box office in 2004were samurai, love and Miyazaki. Unlike most Hollywood films set in Japan, TheLast Samurai was embraced by localaudiences as one of their own. The film outpaced Harry Potter And ThePrisoner Of Azkaban, Finding Nemo and TheReturn Of The King at the box office, andfar surpassed its US take.

In May, Isao Yukisada's romantic drama Crying OutFor Love In The Centre Of The World debuted at the top of the chart and became the second-hottest Japanesefilm of the year, grossing $81.5m (¥8.4bn) and fuelling the ongoing boomfor 'junai' ('pure love') dramas.

In November, Hayao Miyazaki's new animation, Howl'sMoving Castle, opened on 448 screens andset a new opening day record for Japanese film. Toho says Howl's will finish with at least $388m on 30 millionadmissions, but has vowed to strive for $485m. Even if Howl's finishes somewhere south of Toho's target, itis likely to put the year's market share for local films over the 40%mark for the first time since 1986.

Overheard this year

'Before long everyone will be making 3-D animation- and that may be the end of animation as we know it. Idon't think that's a good trend.' Toshio Suzuki, president, Studio Ghibli.

'We usedto buy US films in order of size, starting from the top in terms of budget. Nowwe look more for films with something unique, no matter where they comefrom.' Kaz Morishige, acquisitionsmanager, Shochiku.

Breakthrough talent

With the huge success of his first Hollywood film, The Grudge, Takashi Shimizu is sorting through offers for hisnext move - and it may not be The Grudge 2. 'I asked [The Grudge] producer Sam Raimi if he would let me direct Spider-Man3 - and he can do the sequel to TheGrudge,' Shimizu joked.

The year ahead

'Japanese films are getting to the point where theycan compete effectively. Can we give Hollywood a run for its money'We believe we can.' KazuoKuroi, president, Kadokawa Pictures.

Box office snapshot

Highest-grossing film: The Last Samurai: $133m

Highest-grossing arthouse film: Fahrenheit 9/11: $16.5m

Highest-grossing local film: Howl's Moving Castle*: $92.2m

* As of Dec 19. Still on release