Hollywood just got done with its annual parade of self-congratulation. And I don’t mean that in a bad way — the Oscars may have originated as a marketing gimmick, but they are more than that. They serve as a way for creatives to honor creatives. And every year, movies are made which get called “Oscar bait” — films clearly made without much expectation of huge profits.
At a time when big game companies frequently speak in terms of “it it doesn’t make a million a day, or have a million players a day, it’s not worth making,” why do Hollywood studios keep making films that are small, play to small audiences, and aren’t anywhere near as profitable as a summer blockbuster? Wouldn’t it make sense to focus all your resources on the titles that have the highest ROI? While many small films have great profit margins, the absolute numbers are small, and thus there’s a large opportunity cost to doing the small movies.
Don’t worry, there’s a business reason. The logic goes something like this: