All movies are entertainment, but only good movies are entertaining

Is entertainment an objective term, and entertaining a subjective term?

Sort of. Entertainment is a classification taking into account purpose (Films are a form of entertaining one's self/time). Entertaining is to do with how one emotionally processes something.

The best distinction is the one represented in Collin's English Dictionary:

  entertainment (ˌɛntəˈteɪnmənt) n.
  1. the act or art of entertaining or state of being entertained
  2. an act, production, etc, that entertains; diversion; amusement

versus

  entertaining (ˌɛntəˈteɪnɪŋ) adj.
  1. serving to entertain or give pleasure; diverting; amusing