A Production company is a type of company which is in the business of performing arts. This company aims to develop and physically produce performing arts, film, radio, or television programs.
Another function of such a company is to raise funds for a particular production venture by itself or through an intermediary. The production company can be a small company which produces and sells its products to various film studios. Or it can refer to the studio itself.
Production companies gain profit from the sales of their products which are essentially film, radio, or TV programs. The concept these days is of small production companies who sell their programs to big studios or channels and gain tremendous profits in return. Also production companies that are involved in direct presentation of programs gain their profits from the advertising revenue.
A production company's profits or losses are dependent on the quality of programs and their appreciation amongst viewers. If the viewers like it, it would generate profits and if the users do not like it, it would be a flop and consequently, losses for the production company.