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 “Fast and Furious 3” has reached 4.242 billion yuan. Multiple platforms predict that the final box office for “Fast and Furious 3” may reach 4.382 billion yuan. Based on this calculation, “Fast and Furious 3” will surpass “Avengers: Endgame,” which had a box office of 4.25 billion yuan, becoming the tenth highest-grossing film in Chinese film history. Co-producer Enlight Media has benefited significantly.

Additionally, as of March 16, there are 13 films in China that 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. This indicates that the ceiling for Chinese film box office continues to rise.

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

However, the film investment market has its ups and downs. 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, Lighthouse Media’s previous hit “Nezha” (2019) earned 5.035 billion yuan at the box office, topping China’s film box office charts. Its sequel, “Nezha: The Devil’s Birth” (hereafter “Nezha 2”), with a box office of 15.446 billion yuan, broke Chinese and Asian film box office records and again ranked first in China.

Although the company did not disclose the specific earnings from these two films in its annual report, based on partial data from company disclosures, it is estimated that Lighthouse Media earned about 4.1 billion yuan from these films’ box office alone.

In addition, derivative products based on the “Nezha” IP continue to generate revenue. Lighthouse Media President Wang Changtian previously stated publicly that sales of “Nezha 2” derivatives had reached hundreds of billions of yuan, with future projections exceeding one trillion yuan. He also said that the overall economic contribution from “Nezha 2” would surpass 200 billion yuan.

According to Lighthouse Media’s latest financial report, in the first half of 2025, the company’s revenue from films and related derivatives 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, the IP lifecycle is long, with high long-tail value. Live-action films rely on actors, and sequel costs and actor fees can increase exponentially. In contrast, animation IP assets are digital; characters do not “go out of fashion” or “become more expensive.” The costs of producing sequels decrease, but their brand effect and fan base can 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 derivative sales often support box office revenue, creating a “content + consumer” dual-driven business model that is difficult for live-action films to match.

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

For example, Chinese films have invested in the nine films mentioned earlier that surpassed 4 billion yuan at the box office. 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 strategies 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, is based on market consensus. It can reduce marketing costs for new films and lock in a core audience at the moment of release, which is a crucial advantage in investment evaluation,” said Yang Huaiyu, senior researcher at Shanghai Summer Solstice Consulting Management Co., Ltd., to “Securities Daily.” He added that high-quality IP has the ability to cross cycles. Re-releases, sequels, or reboots of classic IPs can often stimulate the existing market during slow periods, which is also an important indicator of a company’s risk resistance.