How “Trump, Covid and technology” have fuelled the Asian animation boom

In Ne Zha 2, an Asian film this year grabbed the all-time record for the top-grossing animated feature, comfortably beating previous champion Inside Out 2 and 2019’s The Lion King — as well as its own predecessor, the previous top-scoring Asian animation Ne Zha, which earned $726m in 2019.

With more than 90% of its $2.2bn haul earned in its native China, Ne Zha 2 may be an outlier, but it leads a pack of recent Asian animated features that have surpassed box-office milestones or broken through barriers. These include Japanese anime franchise title Demon Slayer: Kimetsu No Yaiba Infinity Castle, which topped the worldwide box office on the last weekend of August, South Korea’s The King Of Kings, which proved a sleeper hit in the US, and Indonesia’s Jumbo.

It is debatable whether this adds up to a trend. The connections between this year’s hit titles are tenuous and the timing is perhaps coincidental, due to the format’s multi-year production schedules. Netflix’s KPop Demon Hunters, another outlier, took seven years to make. Christian-themed The King Of Kings took 10 years to come to fruition.

But real change is afoot among producers and audiences within the region, and there are processes of industrialisation and globalisation that mean Asian animation’s momentum could sustainably continue.

“Technology is a leveller and we can now produce 3D animation to a quality that is equal to Hollywood,” says Yu Zhou, co-founder of Chinese firm Light Chaser Animation. “We are not claiming to be better but we are on a par.”

Founded in 2013, the company has recorded growing returns in recent years, with titles including 2019’s White Snake, 2022’s New Gods: Yang Jian and $258m hit Chang’an in 2023. “Hollywood has a problem of sequels and declining originality [which creates opportunity] and there is certainly a trend in Asia of local content consumption,” he adds.

Perfect storm

Christopher Chen, head of Taiwan’s Reno Studios and one of the executive producers of Ne Zha 2, is firmly in the camp that says the rise of Asian animation is no coincidence.

“It is absolutely not a surprise and has to do with three things that came together as a perfect storm — Trump, Covid and technology,” he says.

Chen argues that the pandemic and Donald Trump’s first-term presidency caused consumer prices to rise, making entertainment a cheap diversion, streaming to become more successful (bringing with it content from around the world), and for VFX and animation talent that were born overseas to leave the US.

“In the multicultural world that we now have, VFX has not been exclusive to the US for many years,” says Chen. “People from Iran, Norway and beyond were working there on visas. The best programmers were Taiwanese or from [mainland] China. Now Trump is kicking them out, these digital nomads have come back here [to Asia], and they come with years of experience of working in the west. Look at Jumbo. It’s a local story that was made in Indonesia with staff who are ex-Pixar.”

Created on a budget reportedly below $3m, Jumbo tells the story of a boy who is habitually under­estimated because of his physique, but overcomes prejudice to put on a stage play. After a slow start, word of mouth kept the film in cinemas for more than 100 days and made it the highest-grossing Indonesian film of all time, with a haul of $26m.

Mia Santosa, vice president of business development at Visinema and co-producer of Jumbo, says the company places great emphasis on cultural aspects. “Story and heartfelt storytelling come first,” she says. “Read the reviews or hear people talking about our film. It’s always first about the story, which resonates deeply across multiple generations in Indonesia.

“They understand, they feel, they have experienced this or know that kids will experience it at some point in their lives. On top of this, audiences had never seen any film with a Pixar-like quality of animation coming from Indonesia. It made people very proud.”

Previously, the highest-scoring Southeast Asian animation was Mechamoto Movie, a 2022 superhero film from Malaysia. “You can also look at the latest Demon Slayer, which released this month in Indonesia,” continues Santosa. “People went to cinemas in costume and wanted to see what happened to the characters they have come to know.”

AI as a tool

Michael Favelle, CEO at Sydney-based Odin’s Eye Entertainment, describes the box-office boom in Asian animation as “a trend that is likely to continue”, and says that quality and quantity have been lifted by a combination of creative tech crews that have been axed by US studios, along with widely available 3D and CGI software.

“There will be more locally rele­vant films that can be made at a viable price point, using AI [artificial intelligence],” says Favelle, whose sales, finance and marketing firm includes fast-growing division Odin’s Eye Animation.

“This is not where AI is doing the creating, but where it is used as a tool to make the process faster. The proportion of great things to terrible things is probably going to stay the same. It’s about how you use the tools.”

The same factors may also be powering up animation in other parts of the world, such as Latvia, which produced Oscar winner Flow — made on a reported budget of $3m.

This year’s multiple successes may suggest Asian storyt­elling through animation is becoming more widely acceptable, but the situation is not clear cut.

“During the pandemic, content was introduced globally without regional boundaries, and it seems the tolerance for embracing local sensibilities has grown,” says Jang Seong-ho, head of Korean VFX studio Mofac and director of The King Of Kings.

The film, a Charles Dickens-style retelling of the story of Jesus Christ, earned $60.2m in North America, where it was released by Angel Studios, before taking $8.8m in Korea and a further $8m from the rest of the world.

In contrast, Ne Zha 2 has earned $23.3m in North America, with more than $20m of that coming from its day-and-date release around Chinese New Year in January. A much smaller proportion came from the English-language dubbed version released by A24 in August. Despite that mismatch, Ne Zha 2 is expected to be pushed by the US distributor in the upcoming Oscars race.

Jumbo has so far been released in 17 other Asian territories, but that makes it a rarity in the region. Such poor visibility — at least in theatres — may be one of several factors that has kept co-production at bay.

“Asian studios are very interested in co-production, but it has always been difficult because Asian countries tend not to have a lot of direct co-production treaties between themselves,” notes Favelle. “They have more treaties with Europe. If you want to produce a film with Malaysia and Taiwan, for example, you might do a trilateral production with Italy.”

Japan’s anime giants have enjoyed the rare privilege of wide Asian releases for their films and series, even within the quota-controlled mainland Chinese market, and have rarely seen the need for co-production. However, challenges and changes are afoot in Japan, even as anime remains the region’s champion, and myriad research and consultancy firms forecast growth running at close to 10% annually until 2030 or beyond.

The challenges come from rivals in the adjacent IP space, such as Korean webtoons and Chinese games content, often based on mythology. These blur the distinction between Japanese anime and other forms of animation.

“Foreign governments and corporations are systematically infiltrating anime production, funding and distribution — not as partners but as competitors seeking to claim this cultural territory for themselves,” says Douglas Montgomery, CEO of Global Connects Media and an adjunct professor at Temple University Japan.

The Japanese industry’s traditional reliance on hand-drawn 2D animation techniques is causing headaches. The process is slow — backlogs of two to three years are common — which puts it at odds with fan expectations. Anime production is also dependent on a workforce that is ageing, poorly paid and often freelance, making increased use of AI a logical, but frowned upon, next step.

Japan’s first anime made openly with AI, Twins Hinahima, emerged this year from Frontier Works and KaKa Creation.

The bigger problem may be meeting growing overseas demand. Anime only became a predominantly export-driven industry in 2023, according to data from the Association of Japanese Animations.

A further hurdle is overcoming corporate inertia. Almost every major company in the Japanese sector, from Bandai Namco to Sega Sammy, is professing overseas expansion, but their plans can seem painfully timid. Last year, broadcast-production conglomerate TBS said it aimed to have 5% of its revenue come from overseas by the 2026 financial year, and raise that to 10% by 2030.

Challenged by Netflix, which is bypassing the Japanese industry’s traditional structures as it builds its own anime portfolio — the streamer says more than 50% of subscribers watch anime and now describes itself as a “service built for anime’s future” — a handful of Japanese companies are investing in expanding the creation and distribution processes. In the past year, entertainment giant Toho has acquired US animation distributor GKids.

Sony acquisitions

The most proactive is Sony which owns Aniplex, producer of the lucrative Demon Slayer franchise. Sony acquired US specialist streamer Crunchyroll in 2021 and merged it with its own Funimation platform. It then revamped the enlarged entity into a distribution and marketing operation that is increasingly involved in theatrical and localised releases.

In the past year, Sony has also bought strategic minority stakes in publisher, film and games firm Kadokawa and Bandai Namco, the toymaker that controls the Gundam (giant robots) franchise. Both Kadokawa and Bandai Namco have this year made acquisition or consolidation moves that boost their in-house production capacity and productivity.

Rivals in other contexts, Sony and Netflix are partners on KPop Demon Hunters, the animation that has become the streamer’s most watched film. While not produced in Asia, the fully CG title was inspired by co-director Maggie Kang’s Korean heritage, blended with a mash-up of mythology, anime feel, idol characters and K-pop music.

Such collaboration, with attention to Asian cultural nuances backed by worldwide distribution, may be the road forward.

“When we see Korean content made overseas, there are often many inaccuracies. Not just Korean content, but other Asian works. I wanted to show our culture, but also my sensibilities exactly,” said Kang on a visit to Seoul last month. “That’s really the only way that K-content can reach an even broader audience and become even more global than it is right now.” 

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