Why Malayalam cinema reported Rs 700 cr loss in 2024: Surging production costs, escalating actors’ fees, emphasis on star power

Number of rush jobs dipped, but no improvement in success rate

Dubbing Malayalam cinema’s performance in 2024 as commendable, as it produced films that helped raise the profile of the industry nationally, Film Employees Federation of Kerala (FEFKA) general secretary and filmmaker B Unnikrishnan said, “However, our success rate still stands between 10–12%. The highest our industry has ever achieved is 14.5%, with the average mostly remaining around 14%.”

Mentioning that while theatres in Kerala were heavily dependent on films from other languages in 2022 and 2023, Film Exhibitors United Organisation of Kerala (FEUOK) president K Vijayakumar pointed out Malayalam cinema saved them this time. “By contrast, in 2024, most other-language films failed to make an impact in the Kerala market,” the theatre owners’ union chief said.

Kerala Film Producers Association (KFPA) secretary B Rakesh, meanwhile, opined that the number of rush jobs has decreased significantly, though such movies haven’t disappeared entirely. “Several well-made small films also emerged, though a few of them struggled at the box office, mainly due to the lack of star power or sufficient hype,” he said.

‘No external financial backing, whether from banks or government’

Unnikrishnan, however, highlighted that despite the low success rate, a significant number of aimless productions are still in the pipeline, raising concerns about how many are aware of the changing market scenario. “Our market paradigm totally changed in 2024. Earlier, we used to get good pre-release OTT business. Now, OTT platforms consider Malayalam movies only post-release, regardless of the star, director or producer. Even when a film becomes a huge hit, the amount it can secure (by selling OTT rights) has gone down significantly,” he shared. The filmmaker further mentioned that the industry has come full circle now, relying entirely on revenue from cinema halls.

When asked whether there is a way to improve the success rate, Unnikrishnan firmly stated that reducing the number of productions is the only possible option. “Often, makers fail to properly assess a movie’s financial viability. It’s also important to note that cinema doesn’t receive external financial backing, whether from banks or the government. The most a film can get from a bank is an overdraft (OD) — never a business loan — and that too provided there’s substantial collateral. This forces producers to rely on private financiers who charge exorbitant interest rates of around 36%. We can’t run any business by paying such a high interest rate, especially when your revenue keeps dwindling. People should proceed with productions only by keeping these realities in mind,” he remarked.

‘Pan-Indian stars’ inflating budgets? Escalating actors’ fees a cause for concern

Stating that the production costs of Malayalam films have reached unprecedented levels, with the remuneration of artistes and some technicians soaring “illogically,” Unnikrishnan noted, “Making even a small movie with a superstar like Mohanlal costs around Rs 40 crore now.” He, however, mentioned that these issues are not exclusive to Malayalam cinema. Adding to this, Rakesh observed, “We could produce more quality films if they all agreed to lower their fees,” while Vijayakumar noted, “Films that used to be made for Rs 1 crore to Rs 5 crore now require budgets of Rs 10 crore to Rs 40 crore. Hence, with only 25-26 movies out of the 199-200 released achieving hit status, the situation is far from promising.”

Commenting on the rising remuneration of actors, Vijayakumar remarked, “When 70-80 per cent of a film’s budget is allocated to actors’ fees, it leaves very little room for the director to ensure quality in other areas. This is the main issue with superstar-driven films. Also, while the market for Malayalam cinema outside Kerala has grown, it is still quite small compared to other big industries. Though some actors claim to be pan-Indian stars, I believe Malayalam cinema does not yet have one. To truly be a pan-Indian star, an actor must have significant influence and appeal in markets beyond their home region. None of our actors currently have that level of popularity outside Kerala to make a major impact. Despite this, many call themselves pan-Indian stars and push their films as capable of achieving international business. This inflates budgets significantly, eventually resulting in massive financial losses when they flop. This is why many big-budget films featuring our ‘stars’ are failing.”

When will theatres start prioritising content over star power?

Nonetheless, distributors and theatres continue to prioritise star power over content, despite the underperformance of many superstar-driven films across languages in 2024. When asked if this tendency would change, Unnikrishnan observed that a shift had already begun. “In Tamil and Telugu industries, even the biggest stars’ movies underperformed in 2024. In Bollywood, stars can no longer guarantee a film’s success. Malayalam cinema’s biggest hit last year was Manjummel Boys, which wasn’t led by a star and was purely content-driven.”

Expanding on this, Vijayakumar stated that nowadays, audiences visit theatres only for movies with good content or those they believe won’t test their patience. “They are completely disregarding other movies. In the past, most films managed to be average grossers, with weekend collections. For instance, if a film was produced on a Rs 10 crore budget, it would recover at least Rs 2-3 crore, limiting the losses. That’s no longer the case. Now, people completely abandon movies that fail to attract them. On the other hand, if a film resonates with the audience, it reflects strongly in its box office performance. Earlier, the maximum profit a film could generate was around Rs 25-50 lakh. Today, profits often exceed Rs 10 crore.”

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Rakesh also stressed that the days when movies, irrespective of their quality, managed to become at least average grossers are long gone. “Many films are ending up as disasters unlike before. Only those with strong content can truly attract audiences, regardless of gimmicks or the involvement of big names,” he added.

Can film organisations curb rising actors’ fees?

When asked if there was anything the industry organisations could do about the escalating actors’ fees and entourage costs, Unnikrishnan said it’s challenging because remuneration is a personal decision. “There’s only so much an organisation can do in that regard. Improvement will come only if we all reach a consensus, acknowledge the crisis and agree on restructuring. One option is adopting a more royalty-based model, where people take a minimum fee and opt for a share of the profit,” he said.

Rakesh, meanwhile, revealed that organisations such as the Association of Malayalam Movie Artists (AMMA) have been made aware of the issue. However, he too acknowledged that there is little the bodies can do. “As a producer, I have the freedom to decide how much to pay an actor, and likewise, actors have their own preferences. Although associations can’t interfere much, it would be good if all came together, understood the situation and held discussions to find an amicable solution,” he added.

The futility of re-releasing old movies: Not even Manichitrathazhu attracted significant footfall

The stakeholders also shared that nearly all old movies re-released last year failed to achieve significant success. Admitting to not understanding why makers are pursuing that route, Unnikrishnan said, “It’s not just that we’ve seen these movies countless times — they’re also readily available for rewatching at our fingertips. For people to choose to watch them in theatres despite that, we must offer a spectacular audio-visual experience. That’s why Devadoothan attracted audiences. Another reason people returned to theatres for its rerelease was the belief that it was treated unfairly during its initial release (in 2000). Since no other film besides Devadoothan managed to draw viewers, this rerelease trend will likely end soon.” Rakesh, meanwhile, pointed out that even Manichitrathazhu, one of Malayalam cinema’s most celebrated classics, failed to attract significant footfall when re-released in August 2024.

As a theatre owner himself, Vijayakumar added, “Only 2-3 films managed to break even and just 1-2 turned a profit. In my opinion, the producers are innocent. They’re being misled by those around them, who convince them that spending a few lakhs on a re-release will bring in crores. While the makers may claim that the new versions offer improved quality, there’s a limit to how much of an audience such films can attract. The few re-releases that did well at the box office succeeded primarily due to their strong content. Most other films didn’t even recoup the costs of printing new posters.”