Malaysia film industry has a long history. From the first film, Laila Majnun (1933) to the contemporary film, more Malay films have been produced. However, the Malay film industry today is challenged by the influx of Hollywood films dominating the local film market. To understand the challenges of the local film industry, this article depicts a reflection from the industry player and audience about creating a comprehensive ecosystem to develop a model of viable and vibrant film industry. Using an in-depth interview method, this article wants to gauge how deep the Western value seeping in local society and changes the value system of indigenous culture which is based on Islamic teachings. The results showed that despite the hybridity between local and Western values, the audience wishes to watch the local culture featured in local films. Although the film industry is challenged with the influx of foreign films, government policies helped the development of the Malay film industry.