Georges Méliès' Decline
Georges Méliès was an illusionist, film director and actor who had immense success in the first decade of the 20th century and whose films like "Voyage dans le Lune" (1902), "Voyage à travers l'Impossible" (1904) and "À la Conquête du Pôle" (1912) are considered to be timeless groundbreaking classics in the history of cinema that helped codify the basis of the modern narrative cinematography. However, since his main interest was to amuse the viewers with his fantasy movies, he wasn't a skilled businessman at all and that, along other factors, caused his decline. Let's see them in greater details.
It is sad to say, but Thomas Alva Edison represented a major factor in Méliès' decline. In 1902, Edison was the one of the many american producers who pirated Méliès' film "Le Voyage dans le Lune" the most, using a copy that he acquired from an algerian distributor to whom Méliès previously sold it, despite the agreement was to not project it outside Algeria. Edison also never gave Méliès credits when he projected the movie. Because of that, Méliès never saw much of the money that was his right to receive.
In 1904, Edison sued american production company Paley & Steiner over copyright infringement and included several other companies in the lawsuit, including Méliès' Star Films, for unknown reasons. Edison later bought Paley & Steiner and the case never went to court.
In 1908, Edison created the Motion Picture Patents Company, with him as president, to control the movie industry in America and Europe and several production companies, including Méliès' Star Films, joined it. Star Films was obligated by contract to deliver to MPPC one thousand feet of reel every week. After a short while, though, producers who previously joined Edison's company were sick of Edison's monopoly, so they got together in the International Filmmakers Congress in Paris, presided over by Méliès. The congress members decided to not sell their films anymore, but only lease them for four-months periods and only to members of the congress, a decision that caused Méliès financial troubles, since fairground and music hall owners were his best clients and because he didn't identify as a corporation member, but as an indipendent producer.
To sum it up, Edison's illegal deeds in 1902 and the creation of his monopoly caused Méliès to lose a big amount of money and his colleagues' attempt to fight back didn't do good for him, either.
His and his brother Gaston Méliès' poor choices in business
While Méliès was a great movie director, he didn't know how to carry on his business, nor did his older brother Gaston.
In 1910, Gaston moved Star Films' american branch's base of operation to San Antonio, Texas and began producing a lot of westerns and was the primary source to fullfill Star Films' obligation to Edison's MCCP, since Georges made very few films between 1910 and 1912.
In 1912, however, Gaston made a reckless decision and went for a trip around the world to film exotic footage that he would later send to his son Paul in America. Because of the long distance, though, the footage was often damaged or unusable and Gaston was soon not be able to fullfill Edison's company obligation anymore. Gaston was eventually forced to sell the american branch of Star Films to Vitagraph, a company under Edison's monopoly. He eventually returned to Europe, but died in 1915 without talking ever again to his brother Georges, who deemed him responsible for his financial troubles.
Unfortunately, Georges did make poor choices as well.
He just sold copies of his movies individually to producers, without claimings on copyright whatsoever. This obviously neglected him earnings he deserved.
In 1912, he made a contract with Charles Pathé which stated that he would receive a lot of money to produce films, but allowed Pathé to distribute and edit them as he wished. The contract also gave Pathé rights over Méliès' home and his studio in Montreuil. When his movie "The Conquest of the Pole" was unsuccessfull, Pathé decided to exercise his right and proceeded to butcher several of Méliès' movies, until Méliès decided to broke the contract in 1913. Méliès hadn't any money to pay his debt to the company and went bankrupt. He couldn't make no more films.
Changings in the public's interest
Aside from those factors, by 1912 the public had lost interest in "attraction films" (an early type of film, popular in the first decade of the 20th century, based on special effects and illusionist tricks, with a simple plot. Also called like this because they were often actual attractions in fairgrounds) like those Méliès liked to produce. That caused Méliès' movies to be unprofitable, because they were made with a large budget to cover the special effects, but very few people went to watch them.
World War I
In his memoirs Méliès stated that the horrors of World War I were one of the causes that he stopped making movies. In addition, in 1917 french army confiscated more than four hundreds Méliès' original prints in order to melt them down and get silver and celluloid from them. The celluloid was later used to fabricate boot heels for the army.
In addition to all these factors, Pathé eventually managed to take possession of Star Films and Montreuil Studio in 1923. Because of this, Méliès destroyed in a rage several of the negatives he stored in the studio as well as sets and costumes. He then disappeared from the public scene and the cinematographic industry and resort selling sweets and toys in a store in the Montparnasse Station in Paris, helped by fund raised by other filmmakers for him.