AMORTIZED SUNK COSTS
To start a major film studio from the ground up, one would usually start with a development fund of between $20 million to $50 million. This is used to develop slates of films, most of which are never made. This is a “sunk cost” that must be amortized in the films that are actually produced.
UNRELIABLE BIG DATA
Hollywood spends anywhere from $250,000 to $5 million on big data analytics before greenlighting a film … without uncovering anything that is reliably predictive.
SEQUELS AND REMAKES
Risk-averse studio executives remain dependent on the cycle of sequels and remakes, even though it is showing signs of diminishing returns.