Hollywood Means Business: To 1948 Production Distribution Exhibition

Who makes the image move? The Major Hollywood Studios ( ) Conglomerates (1970s-present), controlling: Movie studios Record companies Theater chains Amusement parks Video rental outlets And...

EARLY HISTORY OF THE MOTION PICTURE INDUSTRY Highly competitive with easy access for new business interchangeable products smallness of buyers & sellers in relation to market absence of artificial restraints accessibility of resources

THE MOTION PICTURE PATENTS COMPANY (MPPC) Thomas Edison formed MPPC (“the “Trust”) in 1908 as a PATENTS POOL  cooperative of leading U.S. and French film companies  dominated the film industry from  Successfully excluded small companies from the market

WHY did the MPPC fail?  Could not meet product demand  Some independent producers bought film stock from overseas  Some independent producers moved operations out of the NY and NJ area, eventually to California  Independent distributors set up a non-MPPC distribution network  Declared a monopoly in 1915 as the result of a 1912 anti-trust case brought by Fox

THE RISE OF THE HOLLYWOOD STUDIO SYSTEM ( ) From Monopoly (the MPPC) to Oligopoly (the Studio System)

The “Big Five” and the “Little Three” The “Big Five” or the Majors:  Warner Brothers  Paramount  20th Century Fox  Loew's (MGM)  RKO (owned by RCA) The “Little Three” or the Minors:  United Artists  Columbia  Universal

How did the Big Five control all three levels of the industry? VERTICAL INTEGRATION of  production  distribution  exhibition

Production PRODUCTION Studios produced 60% of all U.S. feature films and 75% of "A" films (blockbusters) Each studio produced about 50 movies/year Used factory principles of production: Centralized production and division and specialization of labor Standardization of product Graded films in terms of prestige

Distribution and Exhibition DISTRIBUTION 8 studios collected 95% of all national film rental fees Trade practices effectively closed the lucrative first run market to films made outside the studio system Block booking ensured profitability US films marketed in internationally through same studio controlled systems EXHIBITION Studio ownership of theatres created a need for studios to produce films for them Much money was invested in the building of theatres themselves, especially movie palaces

How did the studios control exhibition? Run First, second, third Zone Geographic coverage without overlaps Clearance Elapsed time between runs Block Booking Rental in packages of assorted films

How did this system work?

High Sierra: A Case Study An A feature, starring Bogart and Lupino Starts first run on January 25, 1941 Studio-run theaters in 100 large cities Ticket price=$1.00 to $1.25 Second run in May, 1941 Second run theaters (smaller cities) Ticket price=$.40 to $.75 Third run in Fall, 1941 Neighborhood and rural theaters Ticket price=$.25

Genre as a Marketing Device GENRE: category in which conventions regarding similar characters, scenes, structures and themes reoccur REGULATED DIFFERENCE: genres benefit the industry by allowing both product standardization and product differentiation

What Undermined the Studio System? Four major shifts occurred in the late 1940s:  Postwar Changes in Society  Families  Baby boom  Move to suburbs  The Rise of Television  The House Committee on Un-American Activities  The Paramount Decision of 1948

The Paramount Decision  In 1948, Supreme Court ruled the studios were in violation of the Sherman Anti-Trust Act, that they were restricting fair trade  Court ordered the Big Five studios to divest their theatre chains (“divorcement”)  Effect:  Studios cut their film production by half  This opened the way for independent producers, though that opening was short-lived

Thought for Today “The film is to America what the flag once was to Britain. By its means Uncle Sam may hope some day, if he is not checked in time, to Americanize the world.” --Unsigned Article, New York Morning Post, 1923