You pretty much nailed it. YC don't understand entertainment, just like the entertainment industry refuse to understand web technology. Transformers is really an edge case, many hollywood films can be made for half of that[1]. Not your typical YC type of investment, but still doable by tech industry, after all we have tech startups like color getting 40 million for an app. The question is will the Tech industry be willing to make investment in an industry it really does not understand. Contrary to some misconception being a great entertainer does require some kind of discipline and experience like being hacker. It takes time, many entertainers start young and spend many hours working on their craft, just like hackers. The stereotypical drugs and alcohol abuse come after. Hollywood type talent is not something you can just whip up. An interesting note, Mark Susters is a tech VC investing in entertainment[2] to disrupt the market. But Mark is working on the low end of the scale, with very low budget productions (compared to hollywood) and average actors and directors. This too is not enough. If YC is seriously going to attempt to kill Hollywood it's going to have to take on risk it never did before. The entertainment crowd is much different from the tech crowd.

[1] The average cost as of 2008 is 106.6 million http://articles.latimes.com/2008/mar/06/business/fi-boxoffic... in 2009 MPAA, the organization compiling and reporting the figures stopped. http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/0...

[2] http://www.bothsidesofthetable.com/2011/11/03/the-future-of-... In his presentation Mark Suster made some correct but to obvious observation, what I disagree is his take on talent, namely he thinks the cost of talent is going up. He's not completely wrong, in that the cost of mediocre talent has gone done, but talent that people want to see, the talent that can sell tickets and drive views, their pay is going up.