The world is discussing an AI burst in 2026, which many believe is inevitable. Whether that happens or not can be debated, but a Tollywood burst in 2026 seems almost certain.
The case of Akhanda 2 is a classic example. The film’s budget has reportedly shot up to Rs 200 crore and has been sold for high prices on paper, yet the producers are still facing a severe financial crunch, largely due to the remunerations of the hero and the director and huge production costs.
Before the pandemic, there was already a strong sentiment in Tollywood that the industry was heading toward a major crisis, with audiences showing less interest in theatres. Even ace producers like D Suresh Babu warned of tough times ahead. But the COVID phase unexpectedly boosted OTT platforms, which began buying films at high prices. This gave filmmakers much-needed oxygen, and heroes and directors enjoyed a golden period, taking home massive paychecks.
But now the situation has become grave.
OTT platforms are no longer buying films the way they did earlier. They are negotiating harder and cutting down on spending. Netflix is setting up operations in Hyderabad and focusing more on originals, showing less interest in buying Telugu films for huge amounts. With direct Hyderabad based negotiations, transparency is increasing, meaning inflated prices are no longer possible, even if Netflix acquires just one or two films a year.
Prime Video is also focusing on originals, not buying many films outright and preferring to stream on revenue-share models. Other players like Hotstar, SonyLIV and Zee, do not spend hundreds of crores on film acquisitions. Amidst all this, tough times lie ahead for Tollywood, and the high-remuneration, high-budget model is about to burst in a big way.
Unless heroes and directors agree to work for lower remunerations or shift to share-based structures, nothing will move forward.
The hero-driven industry may gradually shift back to a producer driven model, similar to the old days of cinema. Directors joining hands with heroes and pushing budgets upward is putting producers under immense pressure. Today, once a film is greenlit, producers often have no say; heroes and directors behave as if they are giving the producer an “opportunity” to earn from their stardom, not the other way around.
This phenomenon may change soon as the market simply cannot generate hundreds of crores neither through theatres nor through OTT platforms. Not every film can be a Pushpa or Kalki 2898 AD. Leaving aside such rare blockbusters, most films suffer huge losses unable to match production costs with returns.
A top producer says the Akhanda 2 issue should warn the industry, urging budget cuts and reduced star remunerations to prevent a crisis. Producer C. Kalyan earlier noted that of nearly 4,000 registered producers, only about 20 remain active, while others have gone dormant due to debts from star driven films.
So, it's high time for producers to be vigilant about the inevitable this time.
