Bhatt, 64, started his career 40 years ago with hard-hitting films like "Arth" and "Saransh". They did not do well at the box-office despite getting critical acclaim, forcing him to take up commercial cinema.
"Somebody told me once that in Indian cinema only bad people can have sex and good ones can fall in love. So, my films during 70s and 80s were highly criticised for their bold content and used to fail at the box-office," said Bhatt while speaking on the topic of 'Media as Catalyst for Social Change' during the CII Media and Entertainment Summit, 2012.
"With the onset of satellite television and economy opening up in 1990, I shifted my genre to musicals and they were box-office hits. But, I personally feel films like 'Aashiqui' and 'Dil Hai Ki Manta Nahin' marked my deterioration as a director. I lost my those audience who liked my 'Arth' and 'Saransh'," Bhatt said.
The producer-director, who now makes commercial movies through his production house Vishesh Films, says he decided to quit direction after facing trouble during the release of his 1998 "Zakhm" which explored religious tension in Indian society.
The film did not do well and the director had trouble with the censor board while releasing it.
"I made 'Zakhm' which was based on communal riots of Mumbai. The film was very close to my heart. It was banned by the censor board and they asked me to alter some scenes to make it appropriate for public viewing. It also failed because people told me it was uncomfortable to watch a film which shows communal carnage.
"But the government gave me national award for strengthening national integrity. I understood that films are not reality they are illusion," he added.