While there are a lot of not so obvious revenue streams for smaller movies, it is not necessarily true that they turn in the black. Hollywood execs are businesspeople looking for profit and so they naturally want the blockbusters, but most of their human capital likes to consider themselves artists. Many of the good movies we see from major studios (I'm not talking about the arthouse movies) - those sleepers that fall under the radar but are very good (e.g. Shawshank Redemption, L.A. Confidential, etc.) are sometimes made as a business expense to keep the talent happy so that they can churn out the tentpole memorial day spectacular filled with explosions and such. If they turn a profit, all the better, but their intent is to keep the high end stuff in production. Put another way, the art fanfare is a business expense to keep the team assembled to produce the schluck that makes the big bucks.