Overview
In the case of a film or television screenplay, the screenwriter may have successfully sold a screenplay to a certain set of producers or studio executives, but then new executives assigned to the project may raise objections to all the scripts and casting decisions they oversee, mandating rewrites and recasting. As directors and actors become "attached" to the project, further rewrites and recasting may be done, to accommodate the needs of the new talents involved in the project. Should the project fail to meet their needs, they might leave the project or simply refuse to complete it, causing further rewrites and recasting. At any point, a project may be forced to begin again from scratch.
It may also be the case that the screenwriters have an issue with the final rights agreement after signing an option, but aren't happy with the full terms, and the project may go in endless circles until either the situation is resolved, or the project is abandoned.
When a film is in development but never receives the necessary production funds, another studio may do a turnaround and produce the film to make it successful. An example of this is when Columbia Pictures developed but dropped E.T. the Extra-Terrestrial. Universal Pictures picked up the movie and made it a success. If a studio completely abandons a film project, the costs are written off as part of the studio's overhead.
Sometimes studios or producers will deliberately halt production in order to stop competition on a different project, or to ensure that people invested will be available for other projects that the studio prefers.
This process can last for months or years. More often than not, a project trapped in this state will be abandoned by all interested parties or canceled outright. As Hollywood starts ten times as many projects as are released, many scripts will end up in this state. This happens most often with projects that have multiple interpretations and affect several points of view.
During a potential writer's strike in 2001, major studios wanted to spend less time and energy bidding on longer-term developments such as film rights to books and focus more on buying projects that would immediately receive a green-light. They were more interested in developing the big budget action thrillers and high concept comedies written by established and credible writers. Studio executives put all uncertain scripts and pitches on the shelves during this time to avoid taking a chance on a long-term development and only wanted projects that were ready to go into production.
Some studios and producers still bought film rights to books but only ones that had successful sales. Examples of this are Dino De Laurentiis' $9 million acquisition of Thomas Harris' Hannibal and Miramax purchasing Mario Puzo's Omertà for $2-$3 million.
Read more about this topic: Development Hell