Japan's film industry is on the road to recovery following the COVID-19 pandemic. Three films released this summer—Demon Slayer: Kimetsu no Yaiba–The Movie: Infinity Castle –Part 1: Akaza Returns, Detective Conan: One-Eyed Flashback, and Kokuho—have dominated the box office so far. These three films alone account for 25% of Japan's total box office revenue from last year. Meanwhile, foreign films, whose share of the market fell to just 25% last year, are also performing well this year. Their results for the first half of the year alone already match last year's total.

Amid this, the shortening of the theatrical window is also being noted. While OTT content platforms like U-NEXT have long offered near-simultaneous releases with theatrical premieres, cases are increasing where Netflix and Disney Plus begin streaming films within 3-4 months after their theatrical run, rather than waiting the usual six months.

One national policy initiative is the improvement of long-neglected issues in the film industry, such as sexual misconduct and working conditions. The Japan Film Production Standards Organization (Eiteki), established in 2002, and Respect Training programs have begun to take effect.

Approximately 1,432 films, including foreign titles, were released in Japanese theaters during the first half of the year. Among films released by June, Detective Conan: One-Eyed Flashback and Kokuho (released June) took the top two spots, commanding an overwhelming share. However, Demon Slayer: Kimetsu no Yaiba –The Movie: Infinity Castle–Part 1: Akaza Returns, released in July, swiftly overtook both films upon release and has maintained the top spot ever since. Foreign films, whose overall share had fallen to 25% last year, are performing strongly this year, matching last year's figures in the first half alone. Nevertheless, the distorted situation remains unchanged: the top 50 films combined (domestic and foreign) account for nearly 70% of the total market share.

All three films are distributed by Toho. However, Demon Slayer, Kokuho (produced by Aniplex subsidiary Miliagon Studio), and the current fourth-place earner Working Cells all involved production by Aniplex, a subsidiary of Sony Music Entertainment.

In fact, Kokuho, where Aniplex and Miliagon served as production managers, did not adopt the traditional Japanese film production committee model. Furthermore, the smash hit Dollhouse (released in June) was also produced entirely with funding from Toho, just like Godzilla Minus One. In terms of financing, production models relying on investment capital from both domestic and international sources are also advancing. This can be seen as a movement away from the production committee model.

The success of Kokuho has also spurred increased attendance at kabuki performances. Inquiries such as “We want to see real kabuki” have reportedly surged at Shochiku headquarters and the Kabukiza, the specialized kabuki theater.

The “Japan Film Production Support Project” is widely recognized as a grant program supporting Japanese film production. Established in 2003 to promote and advance visual arts, it supports the production of outstanding Japanese films using funds from the Cultural Arts Promotion Subsidy. In 2024, 152 projects applied, with 46 selected. Other programs include the “Creator Support Program (Development Program Construction and Implementation)” funded by the Cultural Arts Activity Infrastructure Strengthening Fund, which cultivates creators such as manga artists, animators, directors, composers, and screenwriters, as well as specialists skilled in overseas expansion. Additionally, the “International Co-Production Film Support Program,” funded by the Agency for Cultural Affairs' Cultural Arts Promotion Subsidy, supports production activities through international co-productions that promote international cultural exchange through film and contribute to the promotion of Japanese cinema.

For many years, the standard funding method for Japanese films has been the production committee system. This involves a lead company coordinating joint production by investors such as film companies, advertising agencies, broadcasters, publishers, and trading companies, with the committee owning the copyright. This system, which began around 1990, was criticized by the Ministry of Economy, Trade and Industry in 2002 for its “closed nature, refusing investment from outside the industry.” However, this somewhat opaque method, perhaps suited to balancing the books for films that didn't perform well, has persisted to the present day.

Amid this, film production funds are gaining attention. For example, the “K2P Film Fund I,” established in May 2024 by film producer Muneyuki Kii, who left Toei and founded K2 Pictures. This fund also drew attention when Mitsubishi UFJ Bank decided to invest on July 31st of this year. The fund adopts a Western-style film financing model, leveraging debt. It aims to raise Ten billion Yen and plans to produce approximately 60 films over seven years. Projects are already underway with prominent creators including Takashi Miike, Shunji Iwai, Hirokazu Koreeda, Miwa Nishikawa, Kazuya Shiraishi, Yuriyan Retriever, and animation studio MAPPA.

This initiative aligns with the government's growth target to increase Japan's content industry exports from 5 trillion yen to 20 trillion yen by 2033. While efforts to establish film and entertainment content funds have been underway for roughly 20 years, this marks the first time such a fund appears viable. Training sessions for producers and fund managers will also be held, covering production accounting and completion guarantees.

Mizuho Securities Co., Ltd. Partner with Questry Co., Ltd. and Royalty Bank Co., Ltd launched the "Talent of Talents" Content Fund for Anime Film Production. The upcoming autumn release ‘Treasure Island’ raised funds by issuing Security Tokens—property rights represented by securities like stocks and corporate bonds, transferable via electronic information processing systems—through the CPF Film Fund LLC.

The traditional production committee model, composed solely of film industry professionals, tends to cut less visible production costs to reduce budgets. Developing a project in a better direction within such a consensus-driven process is extremely difficult. Shifting from production committee-style equity to fund-style debt. This may signal a shift towards funds that break through the saturation of Japanese cinema and share the dream of content creation with general investors.

Regarding national subsidies, the “Japanese Film Production Support Project,” supported by the Agency for Cultural Affairs through the Japan Foundation, continues as before, though the subsidy per project has been reduced.

In Japan, the market share ratio between foreign films and domestic films has generally fluctuated around 30% to 70%. In 2024, partly due to production conditions during the COVID-19 pandemic, the share of foreign films dropped to 25%, but it has recovered in the first half of this year.

The largest distributor of domestic films is Toho Co., Ltd. It distributed Demon Slayer: Kimetsu no Yaiba – The Movie: Infinity Castle – Part 1: Akaza Returns, Detective Conan: One-eyed Flashback, and Kokuho, which have collectively grossed approximately Fifty billion Yen to date.

In the foreign film market, three companies are closely competing: Towa Pictures (distributing films like Mission: Impossible - Dead Reckoning), Disney (distributing films like Moana 2), and Warner Bros. (distributing films like A Minecraft Movie). Toho Towa, which holds the currently popular films Wicked and Jurassic World: Rebirth, is also a major distributor with a significant market share. Toho-Towa is also part of the Toho Group. The Toho group dominates the foreign film market.

Previously, films from Hollywood studios that had branch offices in Japan were distributed by Toho Pictures for Paramount titles and by Toho-Towa for Universal titles. Hollywood studios' Japanese subsidiaries include Walt Disney Japan, which distributes 20th Century Studios films (now a Disney subsidiary); Warner Bros. Japan, which distributes Warner films; and Sony Pictures Entertainment Japan, each distributing their respective parent company's films. Recently, Warner and Sony's Japanese branches have increased their distribution of self-produced films. Examples include Warner's Cells at Work! and Frontline, and Sony's La Grande Maison Paris (co-distributed with Toho) and 366 Days (co-distributed with Shochiku), all of which achieved box office success.

Independent distributors include Kino Films (distributor of Conclave, From the World of John Wick: Ballerina), Clockwork (distributing Twilight Warriors), Asmik Ace (distributing At a Confessional: Kishibe Rohan), Tokyo Theatres (distributing Anpanman, Katamoi Sekai), Happinet (distributing The Making of a Japanese, Renoir), and Bitters End (distributing Anora). Their titles can be found among the top positions in the current box office rankings.

Japan has 577 sites and 3,653 screens (as of 2024). Ninety percent of these are multiplexes, many operated by subsidiaries of major film companies like Toho, Shochiku, Toei, and KADOKAWA. A small number of traditional theaters, including those screening arthouse films and non-complex cinemas, remain nationwide. Marunouchi TOEI, a symbol of these street-level theaters, closed its doors this July after 60 years.

TOHO Cinemas operates 705 screens across 75 locations nationwide (including jointly managed theaters). Toei operates 230 screens across 23 locations through T-Joy or partner-operated theaters. Shochiku operates 248 screens across 26 locations through Shochiku Multiplex Theaters (including jointly managed theaters). Cinema complexes are expanding, with new construction underway in locations including Hiroshima City, Hiroshima Prefecture; Hachioji and Shinagawa, Tokyo; Toki City, Gifu Prefecture; and Nagoya City, Aichi Prefecture. Notably, TOHO Cinemas announced its highest-ever monthly box office revenue this past July.

Aeon Entertainment, which places theaters within large shopping centers, boasts more screens than TOHO Cinemas. TOHO Cinemas ranks second, Lawson United Cinemas (KADOKAWA group) third, Shochiku Multiplex Theaters fourth, T-Joy (Toei group) fifth, Tokyu Recreation sixth, and Tokyo Theatres seventh.

Art house films have traditionally been screened in “mini-theaters,” independently capitalized and operated cinemas. In recent years, art house films are increasingly booked on a single screen within cinema complexes, a factor contributing to their box office success.

Many mini-theaters and independent cinemas closed due to the harsh operating conditions during the COVID-19 pandemic, but new cinemas are also opening. In 2025, Cinemalice will open in the Jimbocho/Ochanomizu area, and OttO will open in Omiya City, Saitama Prefecture.

Major film studios and visual technology service companies are restructuring their facilities, positioning virtual production studios and post-production services as venues offering high-end technology. They are actively marketing studio usage both domestically and internationally.

Toei Tokyo Studio is promoting its use as a virtual production studio. Actors perform in front of images projected onto LED displays. Films like Oshi no Ko: The Final Act, and Aibou have already been shot using this studio. Toei established a Virtual Production Department in October 2022, with staff including former ILM employees.

TOHO Studios is promoting its high-end visual post-production facility, HIGH-RESOLUTION BASE. It centers around a DI room compatible with 2K/4K screens, a DI room for monitor grading, and two online editing rooms supporting 4K/HDR. It is equipped with DaVinci Resolve for grading and Autodesk Flame for online editing. Each room is connected via 10Gbps high-speed lines.

Kadokawa Daiei Studio highlighted its virtual production (VP) services. It has also launched technical services, including pre-visualization by the Virtual Art Department (VAD), which is crucial for VP-based filming. The studio has also introduced LED displays and Crystal LED VERONA to explore new possibilities in video production.

IMAGICA GROUP, in collaboration with its four production companies—Robot, Pix, IMAGICA EEX, and Photron—showcases XR (Cross Reality) production utilizing large LED displays. They provide filming and associated systems, offering comprehensive support for video production.

Japan's streaming platform market size in 2024 reached approximately ¥526.2 billion. This represents about 2.5 times the size of the film exhibition market, which has remained around ¥200 billion. The domestic market size based on subscriptions has steadily increased, with the top 10 platforms being: 1st Netflix, 2nd U-NEXT, 3rd Amazon Prime Video, 4th DAZN, 5th Disney+, 6th Hulu, 7th d Anime Store, 7th Lemino, 8th FOD, 9th ABEMA Premium, and 10th TELASA (2024). In 2020, despite COVID-19 restrictions, the market grew by 34.7% year-on-year. Since then, it has continued to expand at a rate in the high teens.

U-NEXT is showing remarkable growth. Its domestic market share is rapidly closing in on Netflix. Beyond its domestic film selection and overwhelming number of titles, it integrated the video streaming service Paravi (operated by TBS TV, TV Tokyo, and WOWOW) in 2023. It has also strengthened its exclusive partnership with Warner Bros. Discovery, securing exclusive streaming rights for sports like the Premier League, tennis, golf, and volleyball to enhance its content.

Netflix, Disney+, Amazon Prime, and U-NEXT are all bolstering local content production through regional players. These players themselves seem attracted to the different production structures—in terms of budget and environment—compared to traditional domestic filmmaking.

Unlike dramas produced through streaming platforms' original programming, film producers who prioritize theatrical release as their first window still don't seem to view OTT as a recoupment route. Traditionally, recoupment points followed theatrical release with TV broadcast rights and DVD sales/rental rights, but balancing this with OTT revenue remains challenging at present.