Despite its many successes, Malayalam cinema faces several challenges, including the threat of piracy, the dominance of Bollywood films in Kerala, and the lack of infrastructure and funding for film production. The industry also faces criticism for its representation of women, with many films accused of perpetuating stereotypes and reinforcing patriarchal norms.

From the elaborate Pooram festivals with caparisoned elephants to the Christian Kappalottam (ship festival) and Muslim Nercha , Malayalam cinema is a anthropological archive. Ee.Ma.Yau is essentially a three-hour, darkly comic funeral ritual where the cultural obsession with a "proper death" over a "proper life" is dissected shot by shot.

Music has been an integral part of Malayalam cinema, with many films featuring memorable songs and scores. The industry has produced legendary music directors like M. S. Baburaj, V. Dakshinamoorthy, and Ouseppachan, who have created iconic soundtracks that have become synonymous with Malayalam cinema. The use of traditional Kerala music, like Sopana Sangeetham and Thiruvangam, has added a unique flavor to many films, showcasing the state's rich musical heritage.

Yet, for all its progressive credentials, Malayalam cinema is also a site of intense cultural contestation. The industry has been critiqued for its "status quo" representation, where lead characters are overwhelmingly from upper-caste Nair or Syrian Christian backgrounds, and darker-skinned actors are often typecast in negative roles. This tension—between a self-image of modernity and an unconscious reinforcement of deep-seated hierarchies (caste, class, gender)—is a recurring theme in its academia. The industry is currently navigating this legacy, especially after the 2024 Hema Committee report exposed the systemic challenges and gender discrimination women face within the industry. Festivals like continue to be crucial release periods, but the industry is grappling with how to celebrate them while also addressing internal crises.

Mohanlal mastered the art of the flawed, relatable common man, blending impeccable comedic timing with intense drama ( Kireedam , Bhramaram ). Mammootty excelled in intense, complex character studies, often portraying rigid, deeply flawed patriarchs or historically significant figures ( Oru Vadakkan Veeragatha , Vidheyan , and more recently, Bramayugam ).