By "the industry" in this post, I refer to that part of the entertainment industry which:
1. Produces movies, TV and video games (as opposed to books, comics etc.)
2. Is motivated by profit (as opposed to fun, politics etc.)
3. Consists of companies (as opposed to lone developers, student teams etc.)
It seems to me that the industry has two characteristics:
Most products follow some formula which is known to be workable.
Under what circumstances is this rational? (I'm not commenting on whether it's artistically good or bad; again, I'm only discussing entertainment as a commercial enterprise motivated by profit.) It seems to me following a proven formula is rational if your priority is to not lose, to go for the sure thing, i.e. the chance of a big hit is not worth the risk of a complete flop.
It's the accepted wisdom that entertainment is a hit driven industry: almost all the profits are generated by a handful of the most successful products, with the rest losing money or barely covering costs.
Now my question: isn't there a contradiction here? If you're selling insurance, following a proven formula may well be the rational thing to do. If you're the owner of one of the handful of franchises that is pulling in big profits, of course you shouldn't mess with a winner. But if you're one of the many also-rans, how is it rational to stick with an almost sure loser? In a hit driven industry, wouldn't it be more rational to concentrate on maximizing your chance of winning big, instead of trying to minimize the risk of a flop?
But I've never worked in the entertainment industry; perhaps my layman's impression of it is inaccurate. Is there something I'm missing, or is a substantial amount of expected profit really being left on the table?