A few companies basically ran all parts of the filmmaking industry, from writing, producing, and directing films to distributing and exhibiting them, and in the process, created dozens of stars and the kind of entertainment America enjoyed for decades.
As it turned out, though, the studio system was ultimately unable to survive all the legal, economic, and social changes it faced, and a discussion of those changes may provide insight into Hollywood's past and how its present came about.
The Hollywood studio system, also known as the 'classical' Hollywood system or the Golden Age of Hollywood, dominated film production and distribution from the 1920s through the 1940s. The eight major motion picture companies that made up the 'big eight' controlled all phases of film production from creation to exhibition in their own chains of movie theaters, and all their stars, directors, writers, and technicians worked for a specified contract term at a certain wage with the studio.
These eight studios were MGM, Paramount Pictures, Warner Bros., 20th Century Fox, RKO Pictures, Universal Studios, Columbia Pictures, and United Artists. These studios managed to run efficiently throughout the early 20th century, producing masses of films that were guaranteed a theatrical release thanks to their ownership of the many cinemas that showed Hollywood films.
The large classic movie studios all expanded by using vertical integration—controlling each aspect of the production process, the distribution system, and their own theater chain in which the films could be shown. The only films to have theatrical exhibition other than those produced by the majors were from small independent producers who did not have sufficient backing or distribution means to contend with these giant companies and so were not a real threat.
The practice of block booking, which forced cinemas to buy groups of films rather than individually choose them, helped further the giants' dominance; each group of films typically included both good and bad movies, but if a cinema wanted a successful blockbuster, it was forced to buy the weaker films along with it, too.
However, eventually the government took steps to limit the immense power enjoyed by the studios. Officials were afraid the big eight motion picture companies were behaving like monopolies, thereby stifling competition. After a lengthy legal battle, a Supreme Court ruling in 1948 outlawed block booking and forced all major Hollywood studios to divest themselves of their chains of movie theaters.
Such events changed Hollywood's history. As soon as the studios were deprived of theater ownership, the structure that allowed them to rise to power for many years diminished and evolved into a new one.
In the 1950s, television was introduced into homes by millions and began to compete with the movies in terms of entertainment. It was now possible to receive entertainment directly through television, and so people no longer had to pay for tickets and travel to theaters.
The studios suffered badly, and many of their movie-making ventures became increasingly difficult and more expensive to manage. Instead, they started to make fewer but more ambitious films, and these film industry changes led to a reevaluation of how Hollywood should produce movies.
Throughout their golden age, the classic movie studios employed large staffs of directors, actors, writers, and technicians working on yearly long-term contracts, even if those employees were not actively involved in any productions. This system worked when revenues remained strong.
With income decreasing dramatically following the introduction of television, this situation became difficult to sustain. Many companies began cutting expenses by abolishing exclusive contracts, enabling actors to choose projects from different studios and further transforming the business.
The breakdown of the studio system created a window for smaller independent filmmakers. The studio system was one that owned theaters and, therefore, restricted exhibition to those studios. The increase in independent production led to an increase in creativity by offering moviegoers a chance to view various forms and kinds of cinema.
This began a new era in Hollywood. New ways of production and new ways of telling a story and filmmaking grew, which in turn gave motion picture studios a reason to grow.
By the end of the 1950's, the standard musicals and formulae that had made studios millions were no longer a guarantee to bring in moviegoers. It was now the younger crowd, who made up most of the clientele, who sought realism and a less conventional form. The standard Hollywood studios, accustomed to working and succeeding with standard procedures and methods for years, did not react quickly.
These film industry changes accelerated movie studio evolution and encouraged fresh ideas across Hollywood.
The studio system of old had effectively died by the early 1960s. The studios lost connection with individual directors and actors and became business structures concerned primarily with the financing, production, and distribution of fewer movies rather than massive operations.
The new Hollywood business model survived in an evolving market, allowing modern major studios to finance and distribute movies that might not have had their own teams in the past.
Despite the fact that studios lost their reign as ruling institutions, their contributions shaped what the movies have become today. Practices established in the old Hollywood business model are still essential parts of filmmaking, advertising, and stardom.
The Hollywood Studio system was an integral part of the growth of movie studios, and its legacy has even impacted us today. Marketing, actor development, and other forms of Hollywood are carried into our era, and their presence can be found all across the entertainment world.
So many factors could have caused the Hollywood Studio System to fail. We can not blame a single event for the downfall of the studio system: government antitrust laws, the arrival of television, costs becoming higher, and audiences moving on.
The demise of the studio system created profound effects on Hollywood history and was instrumental in continuing the ongoing evolution of movie studios.
It was very common for an actor to have a contract, which might last several years, with a particular studio. This meant the studio could dictate to its actors when, what they would do, and what film they would be in. Although this was beneficial for the studio because they were guaranteed the full use of the production and to promote the star value, the actor had a lot less choice in what he or she did than a modern actor.
This was an industry practice where cinema owners had to take a package of films if they wanted a particular feature. The main studios relied on block booking for all their films to find a distribution outlet for every film they made. This was found to be illegal as it limited choice in the industry.
The old system gradually collapsed over a period of years. A series of legal judgments, the arrival of television, increasing costs of film production, and changing consumer demand helped the traditional structure collapse to such a point that in the 1960s, most aspects of the old system had vanished.
The techniques that defined the golden age, such as star promotion, the way the films were marketed, and production methods, remain fundamental in the development of films and entertainment in the contemporary age.
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