(Yicai Global) July 19 -- China's comic and animation market has flourished with a continuous inflow of capital and talent since 2014, an industry insider told Yicai Global.

Three years later, however, about 90 percent of animation studios are still struggling to make ends meet. Maimeng, a new market entrant, has managed to buck the trend and penetrated the Japanese market, known as the 'ground-zero' of world anime.

As capital has kept pouring in in the last three years, many Chinese animation studios have started producing original works, but high costs and the absence of viable profit models still bedevil the industry today, said Qian Xiaoyu, general manager of China Year Beijing Culture Media Co.

Very few adult anime businesses have good business models, noted Luo Hao, chief operations officer at AHA Entertainment (Shanghai) Co. Online video platforms such as IQiyi have started to test pay-per-view services, but revenues they generate are too low to cover the investment and cost of animated productions, he added.

Animation studios have almost exhausted the money received from investors three years ago, Luo continued, and if they still cannot find a viable business model, most may end up in the hands of bigger players.

"Our company has some 30 intellectual property works, but less than a tenth are head IPs, not to mention works that actually make money. In fact, the entire industry operates at a loss. It's no exaggeration to say that 90 percent of animation firms are still in the red," Wang Peng, founder of Studio 9, told our reporter.

However, some Chinese studios have thrived despite the general market downturn. For example, Maimeng recently secured USD15 million (CNY100 million) in funding, and will use the money to ramp up its businesses in Japan and other foreign markets, its chief executive Sun Yumiao told Yicai Global.

Sun elaborated on his decision to enter the Japanese market, the 'capital of anime.' Animation publishing media are in a state of transition in Japan, and this presents an ideal opportunity for Chinese studios. 

Some noticeable changes have taken place in overseas animation markets, he noted. In Japan, for example, e-reading has become very popular with the rise of smartphones, causing a slump in the comic magazine market. At the same time, the country has only very few digital comic and animation publishing platforms, and they are no match for Chinese studios who have substantially more content resources at their disposal. This naturally presents a very good opportunity for Chinese platforms such as Maimeng. 

Maimeng entered the Japanese market taking advantage of opportunities brought by the mobile internet, Sun added, stressing that if his company succeeds in Japan, it can then bring its products to the global markets leveraging the highly commercialized Japanese anime market.

The studio started monetizing its works last August, and has been actively cooperating with advertising agencies. Its operating income totaled CNY17 million last year, of which about 70 percent came from advertising.

However, as a content producer, Maimeng cannot survive on advertising revenues alone. "We hope to creatively fuse interesting ads with our animation works," Sun said. "This year, we'll focus on the native advertising business, and will share the profits with animation artists."

Maimeng successfully exported 16 popular works to Japan last year, and has developed a local fanbase. Over and above its two-way cooperation with Japanese artists and publishers, it will release its own app with payment features this year, and open a branch in South Korea, which has been identified as a key market for its future global expansion.