The term "blue film" may refers to pornographic movies in India that are bought and sold in an underground market. There was also a movie in 1969 by Andy Warhol entitled "Blue Movie" that depicted pornographic scenes and was widely released in the United States.
Upon an internet search, I found almost all references to blue movies or blue films to be related to erotica or pornographic films. I would assume any film referred to as a blue film would contain at least some pornographic scenes. I was not able to determine the etiology of the term "blue film" however.