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Franchises keep the industry profitable
As sequels and remakes often have built-in audiences, they are safer and often return more profits. This keeps the film industry alive.
The argument
Production of remakes, reboots and sequels helps the film industry return profits. This argument assumes that remakes, reboots and sequels come with built-in fans of the prior work which are interested in the new works in the franchises. The commercial significance of that assumption is about predictability rather than size. An audience that already knows the material does not have to be persuaded that the film exists or convinced to take an interest in its premise, so a large part of the uncertainty that normally attends a release has been removed before the film is even made. They will more reliably turn out to see the new films in this franchise than a general audience will to see original films. We see this with films such as Avengers: Endgame, which broke the world box office record as part of a multi-dozen film series, a result made possible because years of earlier instalments had already assembled the audience that turned out for it. The film industry is a risky business running on slim margins, so safe bets are necessary for a studio to survive. The two halves of that sentence are connected. Where margins are thin a studio cannot absorb a run of failures, so its survival depends less on the size of its successes than on limiting how often and how badly it loses, and a project with a predictable floor is therefore worth more to it than one with a higher ceiling and no floor at all. Safe bets such as franchise films can be used to both keep the studio running and fund more original, smaller films, so the distinction between franchise films and original films is not absolute. On this account the two categories are not competing for the same resources but stand in a supply relationship: the reliable earnings of the franchise are what make it possible to finance work that could not be justified on its own commercial prospects.
Premises
Counter-arguments
Fan turnout for franchise films is far from guaranteed. Movies like Ghostbusters (2016) and Star Wars: The Rise of Skywalker have recently returned more disappointing box office numbers than the company anticipated.
Rejecting the premises
[Rejecting P1] Reliability is exactly what the record does not show. Ghostbusters (2016) and Star Wars: The Rise of Skywalker both returned below studio expectations, and a franchise carries its own liability — a poorly received instalment depresses turnout for the next. Avengers: Endgame sits at the top of a distribution with a long tail of underperforming sequels, so citing it selects on the outcome. [Rejecting P2] Franchise films are not low-risk in absolute terms. They carry the largest production and marketing budgets in the industry, so a single failure costs more than several modest originals combined. "Safe bet" describes the probability of a return, not its variance, and the premise needs both. [Rejecting P3] The cross-subsidy is asserted without a mechanism. Studios allocate to what performs, and the same reasoning that favours a sequel over an original at the first decision applies again at the second. The rising share of major slates given over to franchises across the same period is at least as consistent with crowding out as with funding originals.