Japanese movies performed better at the domestic box office overall compared to the previous year, earning 158 billion yen, a 5% increase over 2023 and a new record for domestic movie success. That might not be a good thing for Japanese cinemas.

A healthy movie environment requires balance. Balance between genres and the types of films released, how people can see them, and a balance in how these films are discussed and appreciated to encourage people to enjoy favorites and step beyond their comfort zone. For many years Japan has maintained this strength, although this equilibrium may be disappearing.

The post-COVID era has expedited certain trends amongst Japanese cinema-goers. Since Harry Potter propelled foreign films to a record 73% of box office revenue in 2002, audiences have slowly turned away from international films. In 2019, the percentage of revenue earned by non-Japanese films at the box office sunk to just 45%. The draw of big-name domestic talent and the growing importance of animation in a post-Your Name era manifested in greater success for domestic producers even prior to 2020 when many international productions, particularly those from Hollywood that account for much of foreign box office revenue in Japan, came to a sudden halt.

This was the year Demon Slayer enjoyed a record-breaking release in 2020, while revenue from foreign films collapsed to 23.7%. Much of this came from pre-pandemic releases like Parasite and Star Wars. Rather than recovering in subsequent years, foreign shares of box office revenue have stagnated. While foreign film revenue recovered to 30% in 2021 it failed to recover to pre-pandemic norms, while a significant drop in 2024 saw the number once again slump to just 24%. As such, despite domestic success stories, such a significant decline led to an overall 6% contraction of the market to 206.9 billion yen.

This becomes more stark when looking at the highest grossing films of 2024. Two Japanese animated films surpassed 10 billion yen at the box office last year, those being that year’s installment in the Detective Conan franchise, The Million-Dollar Pentagram, and Haikyuu!! The Dumpster Battle. Major hits in live-action included the sprawling manga adaptation Kingdom 4: Return Of The Great General, Last Mile, a spin-off film set in the universe of the TV series MIU404, and A Strange House, which each earned above 5 billion yen. Only Inside Out 2 and Despicable Me 4 could breach the top 10 at the Japanese box office, themselves established sequels.

In the end it was Wonka that would be the highest-grossing foreign live-action film at the box office, with a 2.3 billion yen 2024 box office return impressive enough to land the film in the top 20, but pales when compared to live-action hits from prior years. While writers strikes delaying production on many US films were cited by Eiren as a factor in this year's decline, it’s also a case that Hollywood blockbusters and the lack of new-generation stars are struggling to appeal to audiences otherwise content with the variety of titles produced domestically.

There are other factors to consider. Once the pandemic shuttered cinemas in 2020, many US studios embraced digital release models as a hybrid future for the film industry. Today, even major hits will hit digital storefronts within a month, with some films like those from Warner Brothers releasing digitally mere weeks after their theatrical debut. Though Japan has embraced digital and streaming as a production partner and platform for greater accessibility to catalogue titles, these haven't cannibalized cinemas in the same way. Whereas America shrunk the theatrical window, Japan stood firm.

Even now, something like Look Back’s 3-month window for an Amazon Prime release is relatively short in a market where it can often take up to a year for home video and digital releases to roll out. As a result films enjoying longer life in Japanese cinemas, fueled further by entry bonuses encouraging repeat visits.

Rather than Japanese dramas adapting their release schedules around the tentpole dates of upcoming blockbusters, the reverse is true. Wicked will finally release in Japanese cinemas on March 7th. Of the Oscar nominees for Best Picture, only Dune Part 2 has released in Japanese cinemas at the time of writing, with other recent international hits like Nosferatu similarly lacking a Japanese release date.

Such delays, coupled with the quick turnaround for digital releases in the US market, reduce anticipation and the desire for audiences to catch these films in cinemas as opposed to waiting for it to release at home. It’s not that people are entirely disinterested in foreign films, with Korean films earning a niche in the market, Marvel films finding decent success with much anticipation for the upcoming Captain America: Brave New World, and a mix of newer foreign films finding success on Netflix and other streaming services. Yet those hits in cinemas, whether animated or live action, each share a few things in common: they star big names or are animated, are part of established franchises, and release on time with the global market.

When films embrace the value of the cinema as a place of community, excitement and storytelling, they are rewarded. Top Gun: Maverick grossed over 10 billion in 2022, and it’s likely more international and Hollywood films will break the top 10 at the Japanese box office in 2025 with the release of films like Mission Impossible and Jurassic World. For many, however, Hollywood is no longer cool, and lacks the respect for the theater as an institution that inspires people to make the effort to go to the cinemas. Even the growth in Japanese domestic films can’t make up for the shortfall and disinterest.

What does this mean for cinemas? While numbers are yet to recover to the success seen in 2019, cinemas have diversified revenue from concert and live viewing experiences, as well as merchandising. Mrs Green Apple: The White Lounge grossed 1.9 billion yen in cinemas last year, and similar experiences serve a key revenue stream for many cinemas. This decline isn't necessarily a cause for concern just yet, with the aforementioned major releases potentially set to turn the tide in 2025.

What these numbers show, however, is a growing break between the demands of Japanese audiences and the global market, and their relationship for the theatrical experience. It’s hard to blame Japanese audiences for these habits if foreign films won’t cater to their interests.