The Malayalam film industry, renowned for its genuine narratives, exceptional storytelling, and outstanding performances, is currently experiencing considerable challenges. Recent reports indicate that the Kerala Film Producers’ Association (KFPA) has revealed that the industry suffered losses amounting to ₹650-700 crore in 2024. G Suresh Kumar, the president of the Film Chamber of Kerala, noted that Mollywood incurred losses of approximately ₹100 crore in January alone, with only Asif Ali’s Rekhachithram achieving profitability at the box office.

These financial setbacks are particularly alarming for an industry that is significantly smaller than its Tamil and Telugu counterparts. In response to this situation, a joint meeting was convened last week, involving producers’ associations, exhibitors, distributors, and the Film Employees Federation of Kerala (FEFKA), to explore potential solutions. Following the meeting, G Suresh Kumar informed the media that if the financial issues are not resolved, the production, distribution, and exhibition of Malayalam cinema will cease operations starting June 1.

Star Remuneration Issue

One significant issue highlighted by Mollywood film producers, including Suresh Kumar, is the exorbitant fees paid to actors and certain technicians. This concern is not unique to Malayalam cinema; it has been a contentious topic across various film industries for many years. Suresh Kumar expressed to Mathrubhumi, “Many producers are in a desperate position, contemplating leaving the country. The current state of Malayalam cinema is such that no producer can feasibly produce a film. The remuneration demanded by stars is beyond our imagination. Without a reduction in their fees, we cannot progress.”

Sreedhar Pillai, a prominent entertainment industry analyst, elaborates, “Primarily, the role of the producer has diminished across all Indian film industries; they wield little influence now. The golden era for producers spanned from the 1960s to the late 1990s, a time when they had the authority to dictate the salaries of leading actors. Presently, producers have lost their grip on the industry, making it challenging to thrive as actors have gained significant power. Many stars have established their own production companies, and when they collaborate with a producer, their compensation can account for 50 to 60 per cent of a film's total budget. Stars often exist in a bubble of success and are reluctant to lower their fees, which is a natural human tendency. Veteran Malayalam producers are questioning the rationale behind working with stars, yet, similar to the Tamil film industry, there are countless aspiring filmmakers ready to seize a star's availability.”

Trade analyst Ramesh Bala concurs with this perspective, stating, “Traditionally, Malayalam films were produced on minimal budgets, often involving just 20 days of shooting. The introduction of luxury accommodations for stars and caravans came much later to Mollywood. Currently, the industry is emulating the Tamil and Telugu film sectors, leading to increased star salaries and filming in international locations. However, considering the relatively small size of the Malayalam film market compared to Tamil and Telugu, revenue collections are unlikely to match. Consequently, producers are now striving to manage these escalating expenses.”

OTT and satellite rights issue

Regarding the issue of OTT and satellite rights, the Indian film industry faced substantial losses during the COVID-19 pandemic but made notable advancements in the OTT space, with numerous films being sold for substantial sums. However, since that time, OTT platforms have revised their content acquisition criteria and terms, which has adversely affected the Indian film industry, including Malayalam cinema. According to industry insiders, even star-studded films are now receiving only 50 to 60 per cent of the amounts they were offered two years ago by OTT platforms. “Very few films are being sold to OTT platforms these days. Simultaneously, production costs have surged, placing producers in a difficult position. Why should producers continue to invest in films that result in losses?” recently questioned producer Suresh Kumar.

The repercussions of OTT and satellite rights extend beyond Malayalam cinema, affecting Tamil films as well. Currently, major Tamil productions are receiving only 50 to 60 per cent of the revenue they garnered two years ago, with the stipulation that streaming platforms will dictate the theatrical release dates. OTT services are reluctant to invest in smaller films, perceiving them as unprofitable. Consequently, producers are increasingly reliant on theatrical releases to generate revenue. The year 2024 proved to be advantageous for smaller films in Malayalam, such as Manjummel Boys, Premalu, and Kishkindha Kaandam. Sreedhar Pillai advises that Malayalam producers should focus on creating small, high-quality films for theatres, as this strategy could ensure their longevity in the industry.

Another significant concern raised by representatives of the Malayalam film industry is the elevated entertainment tax and the Goods and Services Tax (GST). G. Suresh Kumar pointed out that Mollywood is subjected to a combined tax rate of 30 per cent, encompassing both GST and entertainment tax. He advocates for the government to eliminate this tax, as it contributes to unsustainable production costs.

The urgency surrounding the sustainability and survival of the Malayalam film industry has intensified, prompting a delegation from various film organizations to plan a meeting with Kerala Chief Minister Pinarayi Vijayan in the near future. Additionally, the film producers' association has indicated that if financial challenges remain unresolved, they will disclose the actual salary figures of actors, particularly those demanding excessively high compensation that does not align with market standards. It remains uncertain whether this impasse will persist or if resolutions will be achieved by June 1.

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