Though we often try to compete and compare with Bollywood, truth remains that there is significant difference between Tollywood and Bollywood. It is not just about the size and expanse but also about the mindset. Here are some observations that would add value.
Can we imagine a movie like Bajirao Mastani in Tollywood? It is a performance oriented flick with such strong love and emotions with a lot of grandeur. If such a movie comes then our people will call it an art movie. If a film comes with a sizeable skin show, it will be termed as an adult movie.
In Bollywood it is called as bold movie and it gets a very good response. The point is, when you are targeting large audience, everything carries value. When it is small audience, everything looks inferior or immoral. So, that mind shift exists from a long time and it is bound to remain that way.