CHINESE blockbusters are losing their luster. It's hard to believe but we just might be witnessing the beginnings of a sea change in Chinese cinema - the decline of the costume drama blockbuster and the rise of small-and medium-budget films.

Increasingly Chinese filmmakers are showing that a tiny investment can yield huge returns.

For the first time since 2009, domestic films have beaten imports (mostly Hollywood blockbusters) for the first four months of the year, contributing more than 60 percent of the box office that totaled 8 billion yuan (US$129 million). This revenue from domestic films equaled that generated in the first six months of last year.

Among the domestic offerings, the spotlight was stolen by two small-budget films by new directors; together they raked in more than 1 billion yuan.

For years, critics have been clamoring for diversity, criticizing the diet of big-budget spectacles with simple stories set in ancient times, China's answer to the influx of Hollywood blockbusters.

And for years these Chinese spectacles have been audience hits with lavish costumes, martial arts, stunts, fantasy, casts of thousands and dazzling visual effects.

A lot of big-name directors such as Zhang Yimou and Chen Kaige changed their style and went into the mega-movie, megabucks period dramas. These films have included "Hero" (2002), "The Banquet" (2006), "House of Flying Daggers" (2004), "Curse of the Golden Flower" (2006), "The Promise" (2005), "Red Cliff" 1 and 2 (2008, 2009), "Journey to the West - Conquering the Demons" (2013) and "Saving General Yang" (2012).

Two winners

Eventually, aesthetic fatigue has crept in and many viewers are looking for films that are more realistic, relevant and that speak to them. Meaningful, fun and not too weighty.

There is strong evidence that smaller films are making a breakthrough and, of course, every director wants to see a small investment go a long way.

This year two low-budget films - the comedy romance "Finding Mr Right" and the youth nostalgia film "So Young" - have made a big splash.

Made for 30 million yuan, "Mr Right" reaped 520 million yuan at the Chinese box office. Set in Seattle it depicts a transnational romance between a materialist girl and a middle-aged taxi driver.

Based on the best-selling novel by Xin Yiwu, "So Young" is a nostalgic look at young people in their university days. Actress-director Zhao Wei drew on her own experience in making the 60 million yuan film that has taken in 500 million yuan at the box office. The film is still aired at theaters and some industry insiders predict its income could finally top 700 million yuan.

"I dedicate this film to everyone with a similar youth. It's a memory shared by those born on the mainland between the 1970s and 1980s," Zhao told reporters.

Both films are rooted in reality, rather touching and appealing to young people and couples in the 20s and 30s, a major segment of the Chinese market. Positive comments keep pouring in.

"What the two latest hits have in common are heartwarming and realistic stories and good screening slots," says Jasmine Chen, a moviegoer in her 30s.

They also benefited from scheduling, not being released to compete with big Hollywood films.

The top-grossing domestic film of 2012 was "Lost in Thailand," a road movie that cost only 40 million yuan to make and took in 1.28 billion yuan. It outperformed all the Hollywood blockbusters last year including "Titanic 3D" and "Mission: Impossible - Ghost Protocol."

Though the film didn't break "Avatar"'s 1.39 billion yuan record in China in 2009, "Lost in Thailand" and other small films have dramatically boosted the confidence of Chinese filmmakers.

Only one kungfu blockbuster "Chinese Zodiac" was among the 10 highest-grossing films in China last year. Budgeted at 600 million yuan, the film starring Jackie Chan earned 860 million yuan.

Lu Chuan's historical mega-production "The Last Supper" earned only 74 million yuan, failing to cover the budget of nearly 100 million yuan.

Li Xin, a veteran film director, is now making a small-budget film about a group of middle-aged men learning to dance.

Li says that the success of "So Young" and "Mr Right" is based on the film makers' grasp of audience's emotional demands for love and feelings about their youth.

"The success gives impetus to the domestic film industry and demonstrates to risk-averse investors that the winning formula is not big-name cast or stunts but a good story," he says.

According to Guo Ying, a marketing official of the Shanghai United Cinema Lines, the success of these films is not an accident and bodes well for Chinese cinema.

Though these films lack an A-list cast, stunts and special effects, if they are good, they can definitely compete with Hollywood imports since they take up the large bottom and middle of the "film pyramid," Guo says.

Fading blockbusters

"With the elevation of audience taste and the rapid increase in the number of screens in China, this is a golden time for these movies to flourish," Guo says. He also predicts that animations designed for the whole family and films with a realistic take on social issues will do well.

It appears the time has come for China to be turning out the equivalent of the 2002 US-Canadian sleeper "My Big Fat Greek Wedding" that cost around US$6 million to make and earned US$241 million in North America.

China's box office last year roared to more than 17 billion yuan, a 30-percent increase over the previous year. Chinese films accounted for 48 percent of the total takings.

A total of 315 movies were released last year at Chinese cinemas, including 231 domestic films. Medium- and small-budget movies were the big majority and many made a profit. In addition to box office revenue, profits can also be generated through television and Internet copyright sale, product placement and by-products.

Zhang Zhao, a veteran film producer, says that to be commercially successful, a film must have a clear positioning, a target audience, distinctive style and emotional link with the audience. He also cited interactivity and presence online.

"We need to develop a mature industrial chain of movies to expand our market opportunities," he adds. "The point for every producer is not just to share the profit, but to make the market cake bigger."

Film critic Li Tian says the influx of Hollywood movies should be an incentive for creativity in Chinese cinema, not an economic nightmare.

"It turns out that Hollywood blockbuster movies are not invincible," Li says. "But we still need to learn from Hollywood's expertise, its successful commercial formulas and its embrace of many ideas and farsightedness."

He said the Chinese government and cinema lines should give a bigger platform to good quality, low- and moderate-budget films. Most movie houses tend to give more screening time to big-budget films that are likely to bring in more money, he added.