KPop Demon Hunters isn’t just breaking movie-streaming records: Four songs from its soundtrack are currently sitting in the Billboard Hot 100 top 10 at the same time, something that has actually never happened in the chart’s 67-year history. (“Golden” holds the No. 1 spot, “Your Idol” sits at No. 4, “Soda Pop” is at No. 5, and “How It’s Done” landed at No. 10, since you asked.) And when Netflix decided to test the waters with a sing-along theatrical release last weekend, the film earned an estimated $18 million to $20 million at the box office across roughly 1,700 theaters, despite being available to stream at home.

The success has been so overwhelming Netflix and Sony are already in early talks for a sequel. For Netflix, this represents the kind of breakout animated franchise the company has been chasing for years. But for Sony Pictures Animation, which created the film, the story is more complicated—and potentially represents one of the biggest missed opportunities in recent Hollywood history.

The making of the KPop Demon Hunters phenomenon

Sony Pictures Animation developed KPop Demon Hunters with a reported production budget of around $100 million, positioning it as a significant bet on the global appeal of both K-pop culture and supernatural adventure. Directed by Maggie Kang and Chris Appelhans, the film follows the fictional girl group Huntr/X as they battle demons while maintaining their pop-star careers. There’s a rival boy band called Saja Boys … you can imagine where this is going.

The creative gamble, so far, has paid off in surprising ways. The film’s soundtrack didn’t just complement the story—it became a genuine musical phenomenon, with “Golden” becoming the eighth K-pop song to hit No. 1 on the Hot 100, the first time a song from an animated movie reached that spot since “We Don’t Talk About Bruno” from Disney’s Encanto, and the first to feature female artists.

So far, the film has sustained its momentum. KPop Demon Hunters has now spent 10 consecutive weeks at No. 1 on Netflix’s movie charts, adding 25.4 million views in just the most recent week tracked. That kind of staying power is rare for any Netflix original, let alone an obscure animated film that isn’t from an established IP.

Sony’s deal—and what it walked away with

Obviously, KPop Demon Hunters is massive for Netflix. And Sony actually made the movie, so it should be equally massive for them, too, right? Well, not so much. Despite spending roughly $100 million to create what became a global phenomenon, Sony Pictures is expected to net only about $20 million in profit from what is potentially a billion-dollar franchise in KPop Demon Hunters; basically, a fraction of the upside. The reason lies in a 2021 distribution deal Sony struck with Netflix, designed to guarantee returns during the uncertain pandemic era.

According to Puck’s Matthew Belloni, Sony agreed to a “direct-to-platform” arrangement where Netflix would pay back the film’s production budget plus an additional fee capped at $20 million per project. In exchange, Netflix retained all rights to the property and owes no additional profit participation, even as the film becomes a massive hit. This wasn’t Sony shopping around a finished film; Netflix essentially funded the production while Sony handled the creative work.

At the time, the deal made sense. Theaters were still recovering from pandemic closures, animated films were struggling at the box office, and Sony lacked its own major streaming platform. The arrangement guaranteed Sony would make a profit without risking a theatrical flop. But nobody—not even Netflix executives—predicted KPop Demon Hunters would become as big as it did.

To understand the magnitude of what Netflix acquired, consider what Red Notice represented for the platform. That 2021 action film starring Dwayne “The Rock” Johnson, Ryan Reynolds, and Gal Gadot held Netflix’s top spot for nearly four years, with its 230.9 million views becoming the benchmark for Netflix success.

KPop Demon Hunters blew past that number, but it also demonstrated something Red Notice couldn’t achieve: franchise potential. The film’s soundtrack success alone opens up revenue streams that most Netflix originals can’t touch. A reminder: four simultaneous Billboard top 10 hits. And the success of the theatrical sing-along experiment provides another data point for Netflix (and Netflix loves its data points). Netting $18 million to $20 million in a single weekend across 1,700 theaters—roughly half the number of theaters a blockbuster release would get—suggests real audience demand for communal experiences around the franchise, which is promising if Netflix is looking at expanding into more physical spaces.

The missed opportunity for Sony

Had Sony kept the rights to KPop Demon Hunters, the company would be sitting on something potentially worth billions. But what truly acts as salt in the wound, and perhaps some form of cruel irony, is that last September, Sony’s own chief financial officer, Hiroki Totoki, said this in an interview with the Financial Times:

“Whether it’s for games, films, or anime, we don’t have that much IP that we fostered from the beginning. We’re lacking the early phase [of IP], and that’s an issue for us.”

Sony has been candid about its struggles to develop lasting entertainment franchises beyond Spider-Man. Company executives have acknowledged the studio needs more original intellectual property fostered from the beginning—exactly what KPop Demon Hunters represents. Instead, Sony now watches Netflix leverage the property for sequels, merchandise, and much more. (Sony, for what it’s worth, will share in some of the profits, including album sales; Netflix offered no further comment.)

The numbers make the missed opportunity even starker. For context, Netflix reportedly paid $465 million to acquire the rights to Seinfeld reruns. KPop Demon Hunters is an original property that has already proved its global appeal, demonstrated theatrical viability, and created genuine music hits. The $20 million Sony will earn looks modest against that backdrop.

Early sequel talks and what’s next

The speed with which Netflix and Sony entered sequel discussions tells its own story. When a property breaks platform records, generates chart-topping music, and proves theatrical demand all within two months, the economics become clear quickly. Netflix wants to strike while the iron’s hot, and there’s a lot of potential for a KPop Demon Hunters universe.

For Sony, the sequel represents both a vindication and frustration. The studio proved it could create a global hit, but the financial upside flows primarily to Netflix. While Sony retains the right to produce future installments, the terms of any new deals remain to be negotiated—and Netflix now holds most of the leverage.

The broader lesson extends beyond this single film. In an industry where intellectual property increasingly drives long-term value, the difference between owning a hit and creating one for someone else can be measured in billions. KPop Demon Hunters will likely generate revenue for Netflix across multiple films, series, consumer products, and live experiences for years to come. Sony, meanwhile, will move on to the next project, hoping lightning strikes twice.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.