Why the Malayalam film industry is bleeding money: Box office flops reveal a grim reality

Dubai: Ask any Malayalam movie fan and they'll tell you we're in a golden era — a phase of fearless storytelling, breakout talent, and creative highs.

But speak to a producer or industry insider, and the mood quickly shifts. Behind the global acclaim and critical buzz lies a sobering truth: Malayalam cinema, for all its brilliance, is struggling to stay financially afloat.

In March 2025, the harsh economics of the Kerala film industry came into sharp focus. According to reports, out of the 15 Malayalam films released last month in March, only one — L2: Empuraan, the high-octane Mohanlal–Prithviraj action thriller — managed to break even, let alone turn a profit. Mounted on a massive Rs1.75 billion, the film grossed Rs3.25 billion worldwide within its first month, standing out as a rare commercial outlier in an otherwise grim financial landscape, according to Malayalam news website Manorama.

But what's ailing the Malayalam film industry? Gulf News tracked down Dubai-based producer Sophia Paul, known for backing landmark films like Bangalore Days and Minnal Murali, in Kerala and she offered a frank diagnosis of the situation.

"It's simple. Content-wise, many of the films just weren’t strong enough. Malayalam movies have never been iconic star-driven. Unlike Bollywood, big stars doesn’t guarantee a hit anymore. Look at Tovino's Identity — such a huge film, but it didn’t do well. Only for Mohanlal do stars still guarantee an opening," she told Gulf News. Plus, the audience's viewing habits have changed completely.

"Earlier, there would be 200 people at a show; now it’s different. People are reluctant to head into cinemas for every film and would rather wait till it lands on a web streaming platform. The reality is sobering because it's not easy for Malayalam films to be picked up by OTT platforms either," she added.

Her observations reflect a wider industry crisis.

Yet Empuraan is the exception, not the rule. Despite an exceptional year in 2024, when Malayalam cinema more than doubled its box office share from 5 per cent to 10 per cent and crossed the Rs10 billion gross box office collection milestone for the first time, the financial health of the industry remains precarious.

According to a recent Ormax report, the industry saw over 100 per cent growth compared to 2023. Still, the reality is stark: even with this impressive growth, Malayalam cinema recorded losses amounting to between Rs6.6 billion to Rs 7 billion.

Out of 204 films released in 2024 — which included 199 new titles and five remastered classics — only 26 emerged as box office successes. The Kerala Film Producers’ Association (KFPA) reports that while production costs skyrocketed to Rs10 billion, less than 30 per cent was actually recovered. Skyrocketing actor fees and inflated production costs were identified by industry insiders as major culprits behind this grim financial scenario.

Veteran producer Suresh Kumar also echoed similar concerns, recently challenging Malayalam stars to name even one film that consistently crossed the Rs 1billion mark at the box office, underscoring how fragile commercial success remains.

Stakeholders agree that while Malayalam cinema continues to excel in terms of content and critical acclaim — often outperforming other Indian industries weighed down by formulaic storytelling — the industry must address its pressing challenges. Rising production budgets, shifting viewer habits, dwindling OTT support, and overreliance on star power have combined to create a perfect storm.

Still, the phenomenal success of Empuraan offers a glimmer of hope. It proves that with smart planning, big-screen spectacle, and genuinely compelling content, Malayalam cinema can still command not just critical acclaim but major box office rewards. But unless there’s serious introspection — and swift correction — the industry risks undermining its hard-earned global reputation.