As 2016 ends, Bollywood at the edge of a cliff.

For the third straight year, the Indian film industry did not grow. As some studios shut up shop, Hollywood films such as “The Jungle Book” trumped most Hindi films at the box office. Big-ticket movies didn’t strike a chord with audiences and the industry finds itself scrambling for a long-term solution.

Apart from Salman Khan’s wrestling drama “Sultan”, the year’s top grosser with more than 3 billion rupees ($44 million) in revenue, most Bollywood films couldn’t woo audiences or recover their money.

The Bollywood industry made around 23 billion rupees ($338 million) in domestic box-office revenue in 2016, a significant drop from the 27 billion rupees ($397 million) in 2015, according to Shailesh Kapoor, who runs media consulting firm Ormax Media. The 2016 figures are till Dec. 22 and do not include box-office returns for Aamir Khan’s “Dangal”, which released last Friday.

Bollywood is hugely dependent on its male stars to deliver blockbusters, specifically the trio of Salman Khan, Shah Rukh Khan and Aamir Khan, who have delivered some of the industry’s biggest hits. But this year, even Shah Rukh Khan’s “Fan”, a thriller about a man obsessed with a movie star floundered at the box office.

“There are two kinds of films that work at the box office, the big star vehicles like ‘Sultan’ and the niche content films like ‘Piku’ last year. There weren’t too many of either this year. ‘Fan’ not making it past the 100 crore ($14 million) mark was a huge setback,” Kapoor said..

More than 200 Hindi films opened in cinemas this year. Of these, some 60-odd films got a proper release and had a marketing budget. Only 12-14 films made a profit, Kapoor said.

What must strike fear in Bollywood’s heart though is that the number two position in terms of box-office revenue was taken by a Hollywood film. “The Jungle Book”, Disney’s live-action film based on Rudyard Kipling’s book made around 1.8 billion rupees ($26 million) in India, surpassing every other Hindi film except “Sultan”. Marathi film “Sairat” (Wild) also enamoured audiences, crossing the 100 crore rupee ($14 million) mark, more than what most Bollywood films managed.

Biopics might have been the saving grace in 2016 with films such as Ram Madhvani’s “Neerja”, based on the last hours of flight purser Neerja Bhanot, and “M S Dhoni: The Untold Story”, finding audiences. Raja Krishna Menon’s “Airlift”, based on true events surrounding the evacuation of Indians during the Gulf War was one of the first big hits of 2016, making more than a billion rupees at the box office.

“Films like ‘Neerja’ and ‘Pink’ prove that ultimately, content is what matters. Star vehicles are few and far between and even those work when the story clicks,” said trade analyst Amod Mehra.

The problem with star vehicles is that Bollywood doesn’t have too many of them. Other than the Khans, and Akshay Kumar, who had two big films this year (“Rustom” and “Airlift”), no other actor delivered a big weekend opening.

The lack of consistent success took its toll on the industry. In September, media reports said Disney India had decided to shut down its Hindi production department, and would not greenlight any films in 2017.

Balaji Motion Pictures, owned by Ekta Kapoor, which burned its fingers with films like “Kyaa Kool Hain Hum 3”, “Azhar” and “Great Grand Masti” also reportedly shut down its film production wing, with the film adaptation of Chetan Bhagat’s “Half Girlfriend” likely to be its only film in 2017.

“No individual producer has the money to make a film - they have to go to the studios for funding. The biggest problem is the stars - they need to scale down on fees and bring down the cost of making films, but none of them will do that,” Mehra said.

Kapoor said his firm tested more scripts on a test audience this year than in the last three years combined, as studios and production houses looked to cut losses and guard against failure.

Narendra Modi and his government’s demonetisation drive only added to the industry’s woes, with single screens in smaller towns facing the brunt of the decision and several films have seen depleted collections since November.

“Especially in the smaller centres and for the regional industry, demonetisation has largely impacted revenues because there is a huge cash component. In the long run, it would have a positive impact, because even smaller theatres would be forced to go digital, which leads to more transparency,” said Rajkumar Akella, Managing Director, Comscore Theatrical India, which tracks box-office figures for many industry bodies..

Whether it was demonetisation, or just the lack of good films on screen, audiences this year were harsher than before, with films such as “Rock On 2” and “Mirzya”, failing to cover their marketing costs, let alone production costs.

“From our qualitative understanding, people are really beginning to question whether they really need to go to theatres to watch average content. They are happy to watch it on TV or by downloading pirated content,” said Kapoor. “Eventually they will feel that it's not their money's worth, they will stop going to theatres, and the habit will break.”

As companies such as Netflix and Amazon try harder to draw Indians away from TV and theatre screens, offering the same content at half the cost, Bollywood will have to use every trick in the book to make sure it retains its audiences in the coming year.