Entertainment often pays actors, writers and such royalties based on a proportion of profits. By manipulating which specific entity actually shows the profit, they can manipulate how much royalties they have to pay.

And it’s probably closer to what’s happening here. Probably something in their contracts state that certain financial obligations will be paid on the movie’s release. But if the movie is never released they don’t need to pay out.

But it sounds bad to come out and say “our contracts say we can get out of paying people if we don’t release the movie so we aren’t releasing the movie” rather than saying “we aren’t releasing the movie because we can write it off on our taxes.”

Sure in the past there were significant distribution costs in pressing out all those copies of a film and sending it out to theaters everywhere. Even direct to video has distribution costs. So “writing off” a movie to avoid paying those costs made sense when it was done in the past. But direct to streaming is basically just copying some files to a server, and a movie is basically guaranteed to recoup those costs. So the only reason to write off a movie and not release it is because of contract shenanigans.