In 1931, the first Telugu film with audible dialogue, Bhakta Prahlad, was produced by H.M. Reddy. Popularly known as 'talkies', films with sound quickly grew in number and fanbase. In 1934, the industry saw its first major commercial success with Lavakusa. Directed by C. Pullaiah and starring Parupalli Subbarao and Sriranjani in lead roles, the film attracted unprecedented numbers of viewers to theaters and thrust the young film industry into mainstream cultureThough it is celebration time for talkies, can we forget the efforts of pioneers like Dhundiraj Govind Phalke better known as Dadasaheb Phalke who made India's first silent film Raja Harischandra (1913) and R. G. Torney or our own Raghupathi Venkaiah, his son R.S. Prakash and C. Pulliah who made cinema popular during the silent era taking film rolls and projectors exhibiting films in nook and corner of the South? Raghupathi Venkaiah hailed as father of Telugu cinema is the first exhibitor in the South. He bought crono-megaphone, the first projector equipped to reproduce `sound' by disk system and exhibited short reels way back in 1910. He travelled all over the South and in Burma and Ceylon. Venkaiah established Star of East studios known as glass studio to produce silent films.
The success of Alam Ara made Irani to diversify into regional language productions in Telugu and Tamil the same year. It was Ardeshir Irani's associate Hanumantha Muniappa Reddy who directed Bhakta Prahalada and was released six weeks ahead of the first Tamil Talkie, Kalidas that Reddy himself directed with a mixed cast of Telugu, Tamil and Hindi actors. Bhakta Prahlada had an all-Telugu starcast featuring Munipalle Subbiah as Hiranyakasipa and Surabhi Kamalabai as Leelavathy. Both the films were made in Bombay. By 1936, the mass appeal of film allowed directors to move away from religious and mythological themes. That year, under the direction of Krithiventi Nageswara Rao, Prema Vijayam, a film focusing on social issues, was released. Its success prompted the production of dozens of other immensely successful 'social films', notably 1939's Vandemataram and Maala Pilla. Touching on societal problems like the status of Untouchables and the practice of giving dowry, Telugu films increasingly focused on contemporary living: twenty-nine of the ninety-six films released between 1937 and 1947 had social themes.
September 15, 1931 saw the release of the first Telugu talkie Bhakta Prahalada in Crown in Kakinada, Maruthi in Vijayawada, Gaiety in Madras and Minerva in Machlipatnam. Just a few months earlier, on March 14, 1931, the first Indian talkie film, Alam Ara was released at Majestic Cinema, Bombay and in other parts of the country including Maruthi Talkies, Vijayawada. People thronged the cinema halls where it was exhibited. With its box office success the country's first black marketeering in cinema tickets began with a four anna (a quarter of a rupee) ticket getting sold for Rs. 4 or 5! Another doyen, C. Pullaiah after gaining experience in the cinematic art, purchased a second hand movie camera in 1924 in Bombay returned to native Kakinada with an intention to make films in Andhra soil. He shot a thousand feet silent film, Markandeya, with himself cast as Yama and made the film with so many indigenous methods and projected the film on a white washed wall in his house to the amazement of his friends through the very same camera with which he shot the film. He used to call cinema as Goda Meedi Bomma. It was C. Pullaiah who gave Telugu cinema's first super duper hit, Lavakusa (1934) starring Parupalli Subbarao and Sriranjani (Sr.). It was his second feature film .
People flocked to the theatres from near by villages in bullock carts to see Lavakusa. History repeated when C. Pullaiah and his son C. S. Rao remade the film in 1963 with N. T. Rama Rao and Anjali Devi. At a time when the market was flooded with mythological films, Indian Art Cine tone attempted a social, Prema Vijayam (1936) directed by Krithiventi Nageswara Rao. However, the success of reformist filmmaker Gudavalli Ramabrahmam's Malapilla (1938) starring Dr. Govindarajula Subbarao and Kanchanamala and Rythubidda (1939) with Ballari Raghava and Suryakumari gave an impetus to Y.V. Rao, B.N. Reddy and others to produce films on social themes.
The outbreak of World War II and the subsequent resource scarcity caused the British Raj to impose a limit on the use of filmstrip in 1943 to 11,000 feet, a sharp reduction from the 20,000 feet that was common till then. As a result, the number of films produced during the War was substantially lower than in previous years. Nonetheless, prior to the ban, an important shift occurred in the industry: independent studios formed, actors and actresses were signed to contracts limiting who they could work for, and films moved from social themes to folklore legends. 1942's Balanagamma typified these changes: the film featured fantasy elements of cultural lore, was produced by Gemini Studios, and its producers added a restricting clause to the lead actress' contract. By 1947, nearly all films were produced by studios with contracted actors.