The 21st century witnessed the downward journey of the Malayalam films. This is due to the widespread of softcore pornographic films made just for commercial gains. This spoiled the name of Malayalam cinema among the other parts of India, who were unaware of the high standards of Malayalam cinema. The Malayalam film industry in recent times has been affected by the spread of satellite digital television and film piracy. Slapstick comedy is the predominant theme in the films of this era. Meesamadhavan (2002) by Lal Jose and Kunjikkoonan directed by Sasi Shankar (2002) are examples.

Meesamadhavan was a big hit, starring Dileep. Maduranombarakaatu(2000), Meghamalhar(2001), Perumazhakaalam(2004) and Karuthapakshikal(2006) directed by Kamal are some of the films which stood out of the comedy trend of the cinema. Sequels have been made of a number of successful films like Ravanaprabhu (Devasuram) and Nerariyan CBI and Sethuramaiyer CBI (Oru CBI Diarykurippu and Jagratha).


Malayalam movies have seen a real comeback in 2005. New directors such as Lal Jose , Roshan Andrews ,Blessy and Anwar Rasheed brought back original scripts to malayalm movie. Some of the popular movies are Udayananu Tharam, Note Book, Classmates, Thanmatra, Kazhcha, Palunku, Keerthi Chakra, Raja Manikyam, Vinoda Yatra, Rasa thanthram, Arabi Kadha, Kadha Paryumbol and
Chocolate.

This era has seen new promising actors like Prithviraj, Narain, Jayasurya, Meera Jasmin, Navya Nair and Kavya Madhavan along with stalwarts Mohan Lal, and Mammooty.

Malayalam film industry is facing tough competition because of the emergence and growth of Satellite Television Channels. TV Shows became popular among Kerala viewers. This caused the reduction of revenue to the producers of Malayalam films. The easy availability pirated CDs and DVDs of the new Malayalam films also causes the disastrous condition of Malayalam film industry.


AMMA:
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All the major actors and actresses of Malayalam Cinema have formed an organization to safeguard their interests and fight again piracy. The "Association of Malayalam Movie Artists" better know as AMMA (literal meaning "Mother") is also a platform for the members to raise their concerns and issues. The activities of "AMMA" include endowments, insurance schemes, and committees on wages and benefits on revision, fund for research, pensions, education loans for their children etc for the members. The organization is currently producing a film "Twenty 20" starring all the major actors and actresses of the Malayalam Cinema to raise funds for its activities.

Other Organisations:
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Malayalam Cine Technicians Association(MACTA)
Kerala Film Chamber of Commerce
Malayalam Film Chamber of Commerce
Kerala Film Producers' Association
Kerala Film Distributors Association
Kerala Cine Exhibitors Federation
Kerala Film Exhibitors Association
AMMA has restricted the actors and actresses who are its members from participating in the stage shows organized by the TV Channels in order to reduce its impact on the film shows in theatres at that time. There were many unwanted issues and problems between the leading actors, directors and the technicians.