Movies are risky to make. With the costs of producing a movie, which includes paying the cast and crew and for the sets and equipment, post-production and effects, costs can pile up quickly. In addition, there's also the costs of marketing and distribution.
Somewhat naturally, when a film does incredibly well at the box office, you might think that it's a resounding success and everyone laughs all the way to the bank. But that's not always the case.
Enter the strange magic of Hollywood Accounting. More often than not, this system finds a way to take more money from a film's earnings, seeing films lose money even when they're successful.
Under net profits accounting, various individuals and entities, including the studio itself, are paid before the books on a given film are balanced. A film company can assign costs to a film - including distribution, advertising and overhead - that may have no relationship to actual expenses.
These costs are deducted from gross receipts before there is any profit calculation. Consequently, even a box-office blockbuster may show no net profits, despite yielding millions of dollars in income.