For the better part of a decade, observers of Japan’s conservative film industry have predicted that its repeatedly utilized formula would begin to fail. That is to say, audiences would tire of the continued churn of films adapted from legacy content, such as manga and television programs.

It hasn’t happened. Not only that, one could argue that things have never been better with ticket sales setting a box office record in 2019, jumping 17% over the year before to $2.4 billion.

That does not mean that the industry lacks intrigue. In recent times, it has overcome tragedy and even showed signs that some change could be afoot.

A check of the box office top 10 for 2019 reveals predictable results: Anime productions distributed by Toho dominated, with Makoto Shinkai’s “Weathering With You” topping the list with a gross of $129 million.

“In the past, the stars were actors and actresses. But nowadays the stars are anime characters,” says Yusuke Okada, chairman of the Motion Picture Producers Assn. of Japan, at the announcement of the box-office results last month. “We are just making what customers want.”

Perhaps most inspiring among the domestic releases was the unspooling of Kyoto Animation’s “Violet Evergarden Gaiden: Eternity and the Auto Memories Doll” in September. Just two months before, a man allegedly used gasoline to set its studio in Kyoto City ablaze, killing 36 people.

Meanwhile, foreign films claimed 46% of the market. Disney’s “Frozen 2” took the top spot with $117 million in earnings.

But the industry is noting fundamental shifts in moviegoing habits. At the box office press conference last month, Okada was skeptical when asked if the success in 2019 could be replicated this year. “I feel that young people are no longer willing to spend money at the theater,” he said. “Among filmgoers, there seems to be a generational change taking place.”

Part of that change could be due to streaming, which was a late arrival in Japan but has since emerged as a force. According to the Digital Content Assn. of Japan, the streaming market jumped about 19% to around $2 billion between 2017 and 2018.

Netflix has found global success with Japan-based content, including “The Naked Director,” the story of an adult video director, and the reality series “Terrace House.” But anime remains the driver locally, with fans eagerly awaiting the addition of “Ghost in the Shell: SAC_2045” to its platform in April. Some ire was raised on social media in January, however, after Netflix announced a deal to stream 21 films from Studio Ghibli, the popular anime studio, will exclude Japan.

Japan’s film industry utilizes what is known as the “production committee” approach to make films. The process involves a producer, distributor and several other players, perhaps a toy maker or music company, getting together to share risk for a production that suits all of their needs. The results are often productions that rarely appeal to foreign audiences, which makes them a tough sell on the overseas festival circuit.

However, there can be exceptions, such as the zombie pic “One Cut of the Dead.” Distributed by Third Window Films, the film, produced on a tiny budget (around $25,000), collected a whopping $30 million at the box office in Japan after a positive reception at the Udine Far East Film Festival in Italy in 2018.

On a similar path is director Hikari, whose “37 Seconds” won the Audience Award in the Panorama Section at last year’s Berlin Intl. Film Festival. Sales agent Films Boutique repped international sales for the film, whose rights were initially bought at the European Film Market that same year. The film, which tells the story of a woman with cerebral palsy who aspires to be a manga artist, is currently available on Netflix outside of Japan and has garnered strong reviews along the way.

“We traveled a long road to get here,” Hikari said at the film’s release Feb. 7 in Japan. “I’m happy to be able to show a movie like this with everyone I love. It is due to the love of people that a film such as this can be released to the world.”

More predictably, Hirokazu Kore-eda, who along with Kiyoshi Kurosawa and Naomi Kawase, are the rare Japanese regulars at high-profile overseas festivals, opened last year’s Venice Film Festival with “The Truth.

With the film being Kore-eda’s first to be produced overseas, it is one example for how targeting productions outside of Japan could be one way for the industry to head in a new direction, with China at the forefront.

Kore-eda will be in Berlin to participate in the In Transmission program, which has directors in dialogue with directors. Kore-eda and Ang Lee are paired for a Feb. 27 conversation.

Just prior to the outbreak of the coronavirus in late 2019, Chinese tourists were flooding into Japan at record levels, with many of them taking home an enhanced appreciation for the soft-power concept known as “Cool Japan.” The positive sentiment now appears to be paying dividends for Japanese films at the box office.

Last year, Hayao Miyazaki’s 2001 anime “Spirited Away” collected a handsome $69 million in its first release in China. Over its opening weekend in June, the Studio
Ghibli-produced film trounced Disney/Pixar juggernaut “Toy Story 4.” Other anime successes included “One Piece: Stampede” and “Detective Conan: The Fist of Blue Sapphire.” For its part, Kore-eda’s “Shoplifters” took in $14 million.

Co-productions, which currently number less than 10 per year, might further develop interest overseas. In 2018, Japan and China entered into a co-production film treaty. At last year’s TIFFCOM market, which runs in conjunction with the Tokyo Intl. Film Festival, it was learned that the Chinese government-backed fund WeF Cultural Investment Media is considering a remake of the British drama “Still Life” in Japanese through producer Sedic Intl.

To be sure, there is a long way to go. Co-productions will have to exceed the mere “curiosity factor” of a popular Japanese actor or actress appearing in an overseas setting, says producer Jason Gray.

“On a practical level, co-productions can open up market possibilities for Japanese producers and creatives,” says Gray, whose credits include last year’s co-production “To the Ends of the Earth,” the Kurosawa-directed film starring pop-star-turned-actress Atsuko Maeda as a reporter in Uzbekistan, “but they should come from an organic place, with true cultural collaboration and stories that are best served by that model.”