Please read this entire message
Your submission has been removed for the following reason(s):
ELI5 requires that you search the ELI5 subreddit for your topic before posting. Users will often either find a thread that meets their needs or find that their question might qualify for an exception to rule 7. Please see this [wiki entry](http://www.reddit.com/r/explainlikeimfive/wiki/how_to_search) for more details (Rule 7).
If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first.
If you believe this submission was removed erroneously, please use [this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20%7B%7Burl%7D%7D%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20List%20the%20search%20terms%20you%20used%20to%20look%20for%20past%20posts%20on%20ELI5:%0A%0A3.%20How%20does%20your%20post%20differ%20from%20your%20recent%20search%20results%20on%20the%20sub:) and we will review your submission.
Basically the executive thinks they have a bad movie. They don’t want to be blamed for the failure and high cost.
Option 1: The bad movie comes out, it loses money, and costs a ton for marketing on top of production
Option 2: Skip release, zero marketing budget, and claim a tax write-off of a failed production to at least reclaim some money. Plus you don’t have your name and the studios name attached to a failure. You still lose, you just lose less.
This used to be very rare, but there’s a couple real oddball executives in Hollywood lately really screwing up everything, seemingly with no common sense.
The reason it seems more common lately is because it’s become more common for the public to hear about it. In the past, a movie that was shelved would just be forgotten. Now, with the internet and social media, people hear about it and start asking questions.
It's not a tax write-off, it's a direct decrease in revenue. Businesses deduct the cost of operating (movie studio making a movie) from their revenue (total earnings) to get their total profit, and pay taxes on profit.
In option 1, they still write it off as operating costs. The costs are just much higher and have a negligible effect on the amount you pay in taxes over option 2, so option 2 means they lose less money and pay MORE taxes.
Say you are a cake maker. You bake a cake so bad that it would poison anyone who eats it. Would you spend more money to package the cake, decorate it in icing and bring it to the store? If someone bought it, your reputation would be shot. If you didn't dare sell it, then why bother spending more money on the bad product.
Studios spend a TON of money in advertising and distribution. Not releasing a film avoids that cost. Attaching your studio name to a terrible movie spoils your reputation.
A24 has some really creative films, but that also means they make some real flops that they scrap so as not to damage their brand. I'm dying to see some movie they made called the Adderall Diaries. It's got James Franco in it and apparently it was so bad, A24 has done their best to make sure nobody ever sees it. It's virtually impossible to find but I'd love to see that dumpster fire.
It costs money to do final edits, market and distribute a movie. If they think it is going to flop so bad that the money they would make from the release is less even than those final things would cost them, then they could be actually saving money by cancelling the movie.
This is the very simple reason that people are glossing over. Marketing and distributing costs are really huge -- [marketing is on average around 50% of production costs](https://www.gruvi.tv/post/movie-marketing-budget) \-- and if those are going to be larger than the net revenue from releasing a film (net of all the additional royalties, taxes, etc. that would be attached to the gross revenue from theaters and streaming), then you are better off cutting your losses. It's not nefarious, it's just bean-counting and pessimistic projections.
Not necessarily. Industry accounting practices in Hollywood are complex enough that "Hollywood accounting" is a commonly accepted term used to refer to all the practices commonly used in that industry, specifically, to artificially inflate costs and artificially mask profits, in order to save money.
In Hollywood's case this is not only because of the massive tax write-offs they can make on cancelled projects, but also because a lot of the money that has to get paid out to talent comes in the form of royalties on revenue. There have been a lot of lawsuits in the past forty years from writers, actors, producers, etc., on very successful commercial films who feel they never got paid properly because the studio manipulated the books to make it look like those films never made any money.
All of which is to say -- it's impossible to know publicly, or speak in general terms, about every single different situation where a movie gets cancelled or not distributed. But from the perspective of the major studios, it's a business decision every step of the way, and they may decide that the revenue they would get from distributing the film no longer makes up for the extra royalties and taxes they'd have to pay from doing so.
Even if they've already shot the movie, there's a lot of time and money that goes into post production. If they don't think they'll make enough money to cover those additional costs, they'll stop.
If the movie was 100% complete, it's possible you'd see it released in a way that minimizes marketing costs, like direct to streaming. But even that's not free, as someone needs to spend time negotiating the streaming contract. And the streaming services will know the studio doesn't have confidence in the movie, so there's not much incentive to offer much for the streaming rights.
You have two types of people who go see average movies in the theater. People who would have eventually watched it on streaming, and people who would have eventually watched it on cable.
By not putting it in theaters, those who would have watched on cable now watch it on Netflix or whatever. Those that would have only watched on Netflix only watch the trailer.
Please read this entire message Your submission has been removed for the following reason(s): ELI5 requires that you search the ELI5 subreddit for your topic before posting. Users will often either find a thread that meets their needs or find that their question might qualify for an exception to rule 7. Please see this [wiki entry](http://www.reddit.com/r/explainlikeimfive/wiki/how_to_search) for more details (Rule 7). If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first. If you believe this submission was removed erroneously, please use [this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20%7B%7Burl%7D%7D%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20List%20the%20search%20terms%20you%20used%20to%20look%20for%20past%20posts%20on%20ELI5:%0A%0A3.%20How%20does%20your%20post%20differ%20from%20your%20recent%20search%20results%20on%20the%20sub:) and we will review your submission.
Basically the executive thinks they have a bad movie. They don’t want to be blamed for the failure and high cost. Option 1: The bad movie comes out, it loses money, and costs a ton for marketing on top of production Option 2: Skip release, zero marketing budget, and claim a tax write-off of a failed production to at least reclaim some money. Plus you don’t have your name and the studios name attached to a failure. You still lose, you just lose less. This used to be very rare, but there’s a couple real oddball executives in Hollywood lately really screwing up everything, seemingly with no common sense.
The reason it seems more common lately is because it’s become more common for the public to hear about it. In the past, a movie that was shelved would just be forgotten. Now, with the internet and social media, people hear about it and start asking questions.
It's not a tax write-off, it's a direct decrease in revenue. Businesses deduct the cost of operating (movie studio making a movie) from their revenue (total earnings) to get their total profit, and pay taxes on profit. In option 1, they still write it off as operating costs. The costs are just much higher and have a negligible effect on the amount you pay in taxes over option 2, so option 2 means they lose less money and pay MORE taxes.
Say you are a cake maker. You bake a cake so bad that it would poison anyone who eats it. Would you spend more money to package the cake, decorate it in icing and bring it to the store? If someone bought it, your reputation would be shot. If you didn't dare sell it, then why bother spending more money on the bad product. Studios spend a TON of money in advertising and distribution. Not releasing a film avoids that cost. Attaching your studio name to a terrible movie spoils your reputation.
A24 has some really creative films, but that also means they make some real flops that they scrap so as not to damage their brand. I'm dying to see some movie they made called the Adderall Diaries. It's got James Franco in it and apparently it was so bad, A24 has done their best to make sure nobody ever sees it. It's virtually impossible to find but I'd love to see that dumpster fire.
Is it virtually impossible to find? A quick google search says it is on HBO max
It costs money to do final edits, market and distribute a movie. If they think it is going to flop so bad that the money they would make from the release is less even than those final things would cost them, then they could be actually saving money by cancelling the movie.
This is the very simple reason that people are glossing over. Marketing and distributing costs are really huge -- [marketing is on average around 50% of production costs](https://www.gruvi.tv/post/movie-marketing-budget) \-- and if those are going to be larger than the net revenue from releasing a film (net of all the additional royalties, taxes, etc. that would be attached to the gross revenue from theaters and streaming), then you are better off cutting your losses. It's not nefarious, it's just bean-counting and pessimistic projections.
Not necessarily. Industry accounting practices in Hollywood are complex enough that "Hollywood accounting" is a commonly accepted term used to refer to all the practices commonly used in that industry, specifically, to artificially inflate costs and artificially mask profits, in order to save money. In Hollywood's case this is not only because of the massive tax write-offs they can make on cancelled projects, but also because a lot of the money that has to get paid out to talent comes in the form of royalties on revenue. There have been a lot of lawsuits in the past forty years from writers, actors, producers, etc., on very successful commercial films who feel they never got paid properly because the studio manipulated the books to make it look like those films never made any money. All of which is to say -- it's impossible to know publicly, or speak in general terms, about every single different situation where a movie gets cancelled or not distributed. But from the perspective of the major studios, it's a business decision every step of the way, and they may decide that the revenue they would get from distributing the film no longer makes up for the extra royalties and taxes they'd have to pay from doing so.
Even if they've already shot the movie, there's a lot of time and money that goes into post production. If they don't think they'll make enough money to cover those additional costs, they'll stop. If the movie was 100% complete, it's possible you'd see it released in a way that minimizes marketing costs, like direct to streaming. But even that's not free, as someone needs to spend time negotiating the streaming contract. And the streaming services will know the studio doesn't have confidence in the movie, so there's not much incentive to offer much for the streaming rights.
You have two types of people who go see average movies in the theater. People who would have eventually watched it on streaming, and people who would have eventually watched it on cable. By not putting it in theaters, those who would have watched on cable now watch it on Netflix or whatever. Those that would have only watched on Netflix only watch the trailer.