This year has been one of the bleakest years in memory for the Hong Kong film industry, due to a myriad of reasons. Consumer spending after the pandemic has suffered as the economy stalled and inflation rose sharply. Every weekend, tens of thousands of people have turned to traveling across the border to the neighboring city of Shenzhen in Mainland China for cheaper recreational activities, hurting Hong Kong’s recreational industry even further. As people tighten their purse strings, they have become increasingly selective about what to watch in cinemas as opposed to streaming, which provides more entertainment for a lower price.

The result is that overall box revenue in Hong Kong has been on a steady drop since the end of the pandemic. In 2024, Hong Kong saw its lowest overall box office revenue since 2011 (outside 2020 and 2021, when cinemas were shut for extended periods due to the pandemic), despite two record-breaking local hits (The Last Dance and Twilight of the Warriors: Walled In). Considering that box office revenue has already dropped 16.3% year-on-year in the first half (according to figures by Hong Kong’s Hong Kong Motion Picture Industry Association), 2025 is set to see box office revenue drop even lower.

The industry’s troubles were further exacerbated by the disappointing box office performance of several big-budget Hong Kong-Mainland China co-productions in the Mainland, such as The Goldfinger, Customs Frontline and Cesium Fallout. As a result, not only have Hong Kong investors began scaling back on local productions, mainland China investors have also scaled back on financing co-productions by Hong Kong filmmakers, opting for projects by Mainland filmmakers that better suit the taste of local audiences instead.

While it’s too early to track how many films have gone into production in 2025, a report by Hong Kong’s Cultural and Creative Industries Development Agency (CCIDA) (formerly Create Hong Kong) says that only 18 films went into production in 2024, and this number is expected to be even lower in 2025. In the first half of 2025, there were only 20 Hong Kong films released, down from 22 in the first half of 2024.

Nevertheless, Hong Kong still has many major players in the film market, including One Cool Films (founded by actor Louis Koo), Emperor Motion Pictures, Edko Films, Sil-Metropole Organization, Media Asia Films, Mandarin Films, Golden Scene, Mei Ah, Universe, MM2 Hong Kong and Entertaining Power, among others. In the face of market challenges and with Mainland China companies reducing their investment in Hong Kong co-productions due to decreasing box office returns for films by Hong Kong filmmakers, some of these major players have gone from competitors to collaborators, co-producing local projects or assisting with distribution of each other’s films. For example, One Cool signed a partnership deal with Emperor Motion Pictures in 2020 to co-produce and co-distribute ten local films.

Up until the 2010s, film financing in Hong Kong was almost fully private with very little government funding involved with film production, especially when local companies began collaborating with Mainland China companies on co-productions in the early 2000s. However, after the Hong Kong government’s Film Development Fund expanded its scope to partly finance small-to-medium budget film productions in 2007, many local productions now apply for partial government funding to mitigate financial risk.

On the other hand, the past 15 years has seen an explosion of new talents behind the camera in Hong Kong, thanks to the proliferation of film education in higher education institutes, the advent of digital filmmaking, short film competitions such as Fresh Wave, as well as the government-funded First Feature Film Initiative. However, many of these young talents still rely on getting experience on commercial film productions to seek directorial opportunities later on rather than taking on independent productions due to the high cost of filmmaking and the financial risks involved.

The quality of local post-production houses has increased greatly in recent years, with One Cool’s post-production unit leading the market. However, the city’s limited real estate means the city still lacks sufficient physical filmmaking infrastructure. For the past two years, the recently-renovated Shaw Studios has been making a push to promote their creative hub, which includes a production backlot, production office space, and post-production facilities. Even with government support, filmmaking is still a high-risk proposition due to inflation and dwindling box office returns in a small market that is continuing to shrink.

There are three main forms of financing for films in Hong Kong – private funding, government subsidy/loans and co-productions. As mentioned in the previous section, since government subsidy are designed for low-to-mid-budget projects, the projects with the largest scale and budget are co-productions with mainland film companies. However, because of disappointing box office performance of big-budget Hong Kong-Mainland co-productions in recent years, co-productions have scaled back significantly in the past year, especially for big-budget tentpole titles. In the first half of the year, only eight of the twenty local releases received Mainland funding (and only one of them was fully-funded by Mainland companies).

Many local productions that don’t receive any mainland funding have now turned to government support. Since 2007, the government has injected HK$2.9 billion (US$369 million) into the Film Development Fund to help fund productions as well as other film-related projects (such as the Hong Kong Film Awards). The Hong Kong Film Development Council’s Film Production Financing Scheme offers up to 40% of a film’s budget or HK$9 million (US$1.15 million) maximum for a film with a budget of less than HK$60 million (US$7.64 million). Meanwhile, the latest version of the Film Production Financing Scheme grants 40% of a film’s budget or HK$10 million (US$1.27 million) maximum for a film with a budget between HK$8 million (US$1.02) to HK$25 million (US$3.18 million).

Since the FDF’s inception, at least 71 productions have received funding support either through the various stages of the Film Production Financing Scheme or the Film Production Grant Scheme. And in the first half of 2025 alone, at least four local releases received subsidy from the FDF, while one was funded by the Federation of Hong Kong Filmmakers, and another received funding from a charitable foundation. Government funding has become so important for mid-to-low-budget Hong Kong films that one filmmaker recently said in a TV interview that local investors now ask for government funding to be secured before committing to co-funding new projects.

In addition, the Film Development Council also funds the First Film Initiative scheme, a competition that offers full funding for filmmakers making their first feature films; the Directors’ Succession Scheme, which offers a subsidy for projects that pair seasoned filmmakers as producers for films by new directors. In recent years, the FDC has also encouraged more co-productions with the Film Financing Scheme for Mainland Market and the Hong Kong-Europe-Asian Film Collaboration Funding Scheme (more on these later). However, unlike its counterparts in the region, the Hong Kong government does not offer any rebate or tax incentives for foreign productions visiting Hong Kong.

With uncertainties driving a pessimistic outlook in the Hong Kong film industry, it’s already apparent from this year’s film releases that film investors have become significantly more cautious in terms of financing. Most local releases this year have been medium-to-small-scale productions, and this trend is set to continue at least in the coming year.

It should be noted that most films applying for government funding these days, the line between commercial and independent films in Hong Kong has become more blurred than ever. However, there have been some notable independently-funded productions released in 2025 – Sleeper hit documentary Four Trails was self-produced by director Robin Lee and his brother, Ben; True Love, For Once in My Life was entirely funded by Sabrina Tse Shuk-fun, the film’s producer and co-writer; Trevor Choi’s Smashing Frank, a production of a local YouTube channel, was partially funded via a crowdfunding campaign; and Montage of a Modern Motherhood was funded by media industry veteran Winnie Yu Tsang, who credited her late mother as the producer as a tribute to her.

Not unlike most Asian territories, foreign films far outnumber local films in terms of both release and popularity in Hong Kong. In the first half of 2025, Hong Kong saw only 20 local releases, but 119 non-local releases. Even though overall box office revenue is down, foreign releases, especially Hollywood films, still often outgross local films.

(However, it should be noted that in a rare instance, Hong Kong films actually outgrossed foreign films by 5.5% in 2024 because of The Last Dance and Twilight of the Warriors: Walled In.)

In Hong Kong, most major US studios – Universal, Disney, Paramount and Sony Pictures – have local distribution arms for their own films, just as almost every large-scale local film company also handle distribution and oversea sales of their own productions. However, One Cool Films, perhaps the most prolific local film company at the moment, have passed the distribution of some films to Edko, taking advantage of the company’s Broadway Cinema chain.

The largest distributors of non-Hollywood foreign films in Hong Kong are Intercontinental Films, who also owns the MCL cinema chain and is a subsidiary of entertainment conglomerate Esun Holdings, who also owns production company Media Asia; Edko Films, who is the leading distributor of arthouse films in Hong Kong thanks to their Broadway Cinemas and OTT networks; as well as Golden Scene.

Almost all of Hong Kong’s cinema chains are operated by distributors: In addition to Intercontinental and Edko with MCL Cinemas and Broadway Cinemas, respectively, Emperor Motion Pictures run the Emperor Cinema chain, Mandarin Motion Pictures run the Cinema City chain, and Sil-Metropole Organization run the rapidly expanding Cine-Art House chain. Even Golden Scene opened its own cinema in 2021.

Other smaller distributors in Hong Kong include Neofilms and Medialink, which mostly distribute Japanese animation; 13cc, formerly A Really Happy Film and Distribution Workshop; First Distributors, which distributes two to three French titles per year; and Megaton Entertainment, which handles mostly Korean titles.

It should also be noted that the downturn of box office revenue has caused a number of high-profile distributors to slow down significantly or wind down operations altogether since the pandemic. Sundream Motion Pictures, who also used to produce local films, and Golden Harvest’s Gala Films are the most notable examples of this.

The biggest news out of the film industry so far in 2025 has been the recent wave of cinema closures across the city. The first six months of the year alone have already seen nine cinema closures, including seven cinemas operated by Golden Harvest, which decided to exit the exhibition business in Hong Kong altogether. According to local media, 35 cinemas have already shut down in the past six years. However, because other operators took over some of the shuttered cinemas, the total number of cinemas in Hong Kong has only fallen from 294 screens in 62 cinemas in 2020 to 264 screens in 52 cinemas at the moment.

The first half of 2025 saw the disappointing returns at the box office overall, but the bleakest sign of all was this year’s Lunar New Year holidays, which is typically the most lucrative release slot of the year. While a successful Lunar New Year local release earns around HKD$20 to $40 million (US$2.55 to $5.1 million) in a normal year, the top Lunar New Year local release of 2025 – star-studded boxing comedy Hit N Fun – made only HK$13.1 million (US$1.66 million) during the holidays. Even more bleak is that the top-grossing local film of the year – Adam Wong’s The Way We Talk – grossed only HK$13.5 million (US$1.73 million), which is far lower than the usual gross of a blockbuster. Without last year’s blockbusters to pull up the overall revenue, this is a more accurate picture of how local films do at the Hong Kong box office now.

Things are not much better for Hollywood films, which typically draw audiences even when local films lacked appeal. However, even global hits such as A Minecraft Movie only earned HK$22 million (US$2.8 million), while Marvel Studios’ Captain America: Brave New World couldn’t even crack the top five highest-grossing foreign films. Out of the 234 non-Hong Kong films released in Hong Kong in 2024, only 18 of those grossed more than HK$10 million (US$1.27 million), which is usually an unofficial benchmark for box office success (though the benchmark for Hollywood tentpoles should be set much higher).

While this can be blamed on streaming habits and pragmatic consumer behavior, Hong Kong exhibitors have also been slow to adapt new premium formats due to limited construction space and rent pressure that prevent exhibitors to undergo major renovations. Broadway Cinemas chose to launch their first Dolby Cinema in the neighboring city of Macau, while new operators of shuttered cinemas cannot afford more than mere cosmetic changes when they take over because of high rent. As a result, Hong Kong exhibitors seem to be trapped in a vicious cycle where they must improve their hardware to attract more audiences, but they can’t afford to do so because there are not enough audiences to justify the extended closure needed for renovation.

Thanks to its decades of filmmaking experience, Hong Kong has a well-developed production ecosystem. Louis Koo’s One Cool Group has been the industry leader in the past decade, with large post-production offices that offers comprehensive production and post-production services in both Hong Kong and Thailand. Meanwhile, Shaw Studios has been promoting their production services both locally and abroad, offering production offices, backlot studios and even a large cinema that can double as a Dolby Atmos-enabled sound mixing stage. In terms of special effects, while early industry pioneers Centro and Menfond are long gone, the sector is now led by Free-D Workshop, vfxNova, FATface and other studios, though larger productions still turn to foreign companies for more complex demands.

However, as mentioned in previous sections, Hong Kong’s dense population means that there isn’t enough physical space to create addition production spaces, which is why many large-scale productions tend to film in Mainland China, where there is space to construct large-scale sets at lower cost. The possibility of constructing new large-scale production spaces in Hong Kong is unlikely in the foreseeable future as real estate remains the most valuable commodity in a small city like Hong Kong.

Like the rest of the world, the Hong Kong film industry is also actively looking to take advantage of progress in artificial intelligence. In early June, One Cool Group released a 45-second video that was made with their new In-Content Domain Adaptive Video Generation system and Google’s Veo2. One Cool founder Louis Koo has told the media that he hopes to integrate AI into filmmaking to simplify pre-visualization and special effects. There has also been an increase in the use of AI in television for generating conceptual images.

According to report by PwC Hong Kong¹, OTT has experienced rapid growth in the past several years. The company projects that at the year-on-year rate of 5.7%, Hong Kong’s OTT market is expected to grow from US$371 million in 2023 to US$491 million in 2028. Among that, an astonishing 84% of that revenue is for streaming services.

Hong Kong has strong competition streaming market in terms of the number of competitors. However, local streaming services such as PCCW’s Viu and HMVOD cannot compete with American streaming giants Netflix and Disney+ in terms of content. While Viu tries to differentiate itself by specializing in Asian content (such as Korean dramas and Japanese anime), the two American streaming services continue to dominate both market share and public awareness.

However, OTT is not a major recoupment route in Hong Kong films because of a weak rental market in which consumers prefer a monthly subscription model rather than pay-per-view. Nevertheless, local companies such as Emperor Motion Pictures and Edko Films do sell local streaming rights of their films to Disney+, but not many Hong Kong films receive worldwide releases via global streaming platforms.

Unlike other territories in Asia, streaming has yet to be seen as a viable option for filmmakers, either. A recent interview with Tin Kai-man, actor and former Chairman of the Federation of Hong Kong Filmmakers, confirmed that global streaming platforms such as Netflix have no interest in funding local productions like they have done in South Korea, Taiwan and Southeast Asia because local filmmakers seek to comply with Mainland China’s censorship framework for access into the market and a perceived lack of diversity in local films².

Nevertheless, the Film Development Fund launched a Content Development Scheme for Streaming Platforms last year, which awards up to HK$5.7 million (US$726,000) to a maximum of four winning teams for the development of mini-series designed to be broadcast on streaming platforms. The ten shortlisted projects at phase one – chosen from 50 eligible projects - include those by seasoned veterans such as Lawrence Lau, Peter Ho-sun Chan, Soi Cheang and Derek Yee, showing that filmmakers are still hoping streaming could offer an alternative for the Hong Kong film industry.

In the early 2000s, the Hong Kong and the Mainland China government signed the Closer Economic Partnership Arrangement. Under this deal, Chinese-language films produced by Hong Kong companies are not subject to the import quota set for foreign films, while films co-produced by Hong Kong and the Mainland are treated as Mainland productions, provided that certain conditions surrounding the cast are met. In addition, Hong Kong companies could set up their own cinema business in the Mainland, and Hong Kong films in Cantonese could be distributed in Guangdong Province with improved profit-sharing arrangement. Because of this, at the peak of co-productions, over half of Hong Kong projects were co-productions between Hong Kong and Mainland China.

Up until recently, the Hong Kong government did not provide any financial support for co-productions. However, the Hong Kong Film Development Council has now launched both the Film Financing Scheme for Mainland Market and the Hong Kong-Europe-Asian Film Collaboration Funding Scheme (HKEA) The former offers HK$10 million (US$1.27 million) to films by Hong Kong filmmakers that are successfully released theatrically in both Hong Kong and Mainland China, encouraging companies on both sides to invest more in Hong Kong filmmakers. Meanwhile, the latter offers a maximum of HK$9 million (US$1.15 million) to two Hong Kong co-productions with Europe and Asia, respectively.

In addition to these government schemes, Hong Kong filmmakers have made an effort to attempt co-productions outside of Mainland China. Director Ho Cheuk-tin (The Sparring Partner) announced that his next film would be made in Taiwan; Measure in Time, the first film produced under the FDC’s Director’s Succession Scheme, is also Hong Kong-Taiwan co-production.