What “Hollywood Accounting” teaches us about management risk

You can fix the game of declaring profit, but you can't fix the game of revenue. And therein lies the problem: management risk represents the ability of a business to draw a profit from revenue. Tax-flight and profit-sharing shenanigans represent the management risk of dishonesty, though more often management risk is the aptitude of a manager to run the business well.

The businesses we are working with (I'm with RT, wrote the post) aren't films. They're startups and operating businesses. And we believe royalty financing has more scaling potential in a massive crowdfunding marketplace than equity financing. Removing management risk makes crowdfunding more viable.

I'm not making a point that film investing is good or bad. I submitted this to HN because the audience is tuned to startup and business perspectives.

From an outsider's PoV, it is counter intuitive that these major films are technically not profitable. We aren't as surprised by their revenue, and that is the point: in the example of those films, revenue would have been easier to predict than profit.