Studio System

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Studio System

THE EMERGENCE OF THE HOLLYWOOD
STUDIO SYSTEM
THE GOLDEN AGE
THE TELEVISION ERA AND
THE NEW HOLLYWOOD
FURTHER READING

Since the advent of commercial cinema over a century ago, the costs and complexity of filmmaking have encouraged producers to develop a factory-oriented approach to production. The benefits of such an approach include the centralization of both production and management; the division and detailed subdivision of labor; a standardized mode of production, film style, and type of product; cost efficiencies derived from economies of scale; consistent production values; and the cultivation of a brand name in the movie marketplace. This approach coalesced in Hollywood, California in the 1910s, when that locale became the nexus of commercial film production in the United States. The dominant firms referred to their production facilities as "studios," which invoked the more artistic aspects of filmmaking, although operations were modeled on the kind of mass production that Henry Ford (1863–1947) was introducing to the auto industry at the time.

The Hollywood studios that emerged in the 1910s and 1920s—Paramount, Fox, Warner Bros., et al.—complemented their factory-based production operations with common business practices that enabled them to collectively dominate the movie industry in the US and, increasingly, overseas as well. The fact that most of the early studios still dominate the industry on a global scale underscores their capacity to adapt and survive, although they no longer control the industry to anywhere near the extent that they did from the 1920s to through the 1940s, during Hollywood's so-called classical era, when the studio system was at its height, and when the studios' collective dominion at home and abroad established Hollywood as a national cinema with tremendous global currency. Film studios in other countries have enjoyed great success for periods of time, occasionally to the extent that the terms "studio system" and "national cinema" apply to them as well. This success often coincided with the national and international popularity of a particular type of product or film style, as with Ufa and German Expressionism in the 1920s, or the remarkable run of Alfred Hitchcock-directed thrillers from Gaumont British Distributors Ltd. in the 1930s. In some instances, sheer size and volume of output put a studio on the global or regional map, as with Germany's Ufa, Italy's Cinecitta, and a few others. But only India's "Bollywood" has developed a studio system comparable to Hollywood's. Like the US film industry, India's emerged in the 1910s and 1920s in a major west-coast city, Bombay (now Mumbai), and developed a factory-based mode of production dominated by a number of powerful firms. Bollywood, like Hollywood, is a relentlessly market-driven industry geared for stars, genres, and standardized film styles, but it remains far more productive, turning out some eight hundred features per year—although a key distinction from Hollywood has been Bollywood's focus on its domestic and regional markets.

In the larger global context, Hollywood has been the dominant force throughout motion picture history due to the studio's collective control of distribution as well as production. This control diminished considerably in the postwar era due to the rise in independent production and freelance talent, as well as the threat of television and other new media, and it has eroded even further since the 1980s as the studios became subdivisions of global media conglomerates like Sony, Viacom, News Corporation, and General Electric. Still, the Hollywood studios are the strongest shaping forces in the movie industry, and their operations today are a fundamental extension of the system that they established at their inception.

THOMAS H. INCE
b. Thomas Harper Ince, Newport, Rhode Island, 6 November 1882, d. on or about 19 November 1924

Thomas Ince wielded enormous influence over the Hollywood studio system, particularly the factory-based mode of production that came to characterize it. Ince wrote, directed, and produced scores of top features from 1914 until his untimely death in 1924, but his most important contributions involved not individual films but the filmmaking process. More than any other Hollywood pioneer, Ince anticipated and effectively defined the roles of film producer and production executive during the nascent studio era. And as a one-man writing staff who supervised every stage of production and eventual release, Ince also was a consummate creative producer and innovative entrepreneur who maintained a steady output of high-quality, commercially successful films. In the process, he refined a number of key aspects of the emerging system, from the shooting script as a blueprint for production to the centralized studio system and the assembly-line construction of multiple films.

Born into a show-business family (his parents were stage actors), Ince moved from stage to screen early in his career, and in 1911 moved from New York to Hollywood, where he soon gained a reputation as the director (and frequently the writer) of hundreds of shorts, many of them two-reel westerns starring William S. Hart. He directed his first feature, The Battle of Gettysburg, in 1913, although by then his interests were turning toward producing. In 1915, he joined D. W. Griffith and Mack Sennett to form Triangle Pictures, one of Hollywood's first major independent production companies. Ince enjoyed immediate success with feature-length hits like The Coward (1915) and Civilization (1916), and in 1916 he constructed his own studio in Culver City, California. Known as "Inceville," years later it became the home of Metro-Goldwyn-Mayer.

By then Ince had abandoned directing altogether, concentrating instead on developing the resources and procedures for the systematic production of quality films. He supervised all production at his studio, personally scripting many of the films and insisting on strict adherence to detailed shooting scripts. He built a stable of contract stars and directors and kept a Wild West show on the lot to enhance the production value of his westerns, which were produced on a sprawling back lot that comprised thousands of acres. Willful and often difficult, Ince had a falling out with his Triangle partners, who took with them many of his key filmmaking talent as well, most notably Hart, when the partnership dissolved. He also shifted from Paramount to Metro to First National as his distributor, always looking for ways to optimize both his authority and his income.

Ince's career was cut short by his mysterious death during an outing aboard William Randolph Hearst's private yacht—a now-legendary incident that has overshadowed his accomplishments as one of the chief architects of the Hollywood studio system.

RECOMMENDED VIEWING

The Battle of Gettysburg (1913), The Coward (1915), Civilization (1916), Hell's Hinges (1916), Anna Christie (1923)

THE EMERGENCE OF THE HOLLYWOOD
STUDIO SYSTEM

The first Hollywood studios emerged between 1912 and 1915, as US filmmaking migrated to the Los Angeles area and quickly developed a standardized mode of production. Several major firms built massive filmmaking factories to accommodate the rapidly expanding industry, the most significant being Universal City, by far the largest in the world when it was completed in 1915. Meanwhile, smaller, independent producers developed modest operations geared for the efficient, systematic output of particular types of film—Thomas H. Ince's (1882–1924)

two-reel westerns, for instance, and Mack Sennett's (1880–1960) comedy shorts. Ince in particular refined a range of production practices to ensure cost efficiency and quality control, including centralized management, shooting scripts as blueprints for production, and a clear division of work roles in an assembly-line operation. The larger studios refined similar practices on a grander scale, enabling them to produce an enormous volume of pictures—up to 250 features, shorts, and serials per year in the case of Universal Pictures.

Another key aspect of the emerging studio system was the vertical integration of film production, distribution, and exhibition within a single corporation. The prime mover here was Paramount Pictures, created via the 1916 merger of a nationwide distributor, Paramount, with two production companies, Famous Players in New York and the Lasky Corporation in Los Angeles. The merger was engineered by Adolph Zukor (1873–1976), who soon controlled the entire operation and thus became the prototypical movie mogul. Zukor's bicoastal operation turned out over one-hundred feature films per year and threatened to corner the market, provoking a group of theater owners to join forces as the First National Exhibitors' Circuit Inc., a nationwide distribution company, and to create a West Coast production studio.

Soon Paramount and First National were competing for top talent, paying them record sums but increasingly controlling their careers. This led three major stars, Charlie Chaplin (1889–1977), Mary Pickford (1892–1979), and Douglas Fairbanks (1883–1939), along with producer-director D. W. Griffith (1875–1948), to create United Artists in 1919, defying the burgeoning studio system but scarcely stemming its development. By then Zukor was moving into exhibition, an expansion effort that peaked with the 1925 acquisition of the Balaban theater. Some studios, notably Fox, Warner Bros., and Metro-Goldwyn-Mayer—developed vertically integrated companies via expansion or merger. Hollywood's corporate power structure fully coalesced with the coming of sound in the late 1920s, when the massive costs of sound conversion and ensuing "talkie boom" weeded out the weaker companies and consolidated the majors' collective control. Talking pictures also spawned RKO (Radio-Keith-Orpheum) Radio Pictures, a fully integrated studio created via merger in 1928 by David Sarnoff, head of RCA (Radio Corporation of America), the parent company of RKO (as well as NBC) and a key force in the coming of sound.

The talkie boom carried Hollywood to its best year ever in 1930, despite the October 1929 stock market crash. The Depression did hit Hollywood with a vengeance in 1931 and 1932, although by then the basic contours of the studio system were firmly in place. The dominant powers were the Big Eight producer-distributors, which included two distinct classes of studios: the Big Five integrated majors—Paramount, MGM, Fox (later Twentieth Century Fox), Warner Bros., and RKO—whose theater chains gave them distinct advantages in size, resources, and market leverage; and the Little Three—Universal, Columbia, and United Artists—which produced top features and boasted nationwide distribution circuits but did not own their own theaters. The Big Five's superior resources enabled them to turn out a higher proportion of A-class films, while Columbia and Universal relied far more heavily on second-rate products. United Artists, meanwhile, saw its mission change as the founder-owners became less active, and by 1930 functioned mainly as a distributor for a handful of major independent producers. "Poverty Row" studios like Monogram and (later) Republic rounded out the system, which produced low-grade B movies but had no distribution or exhibition operations.

Key to the studio system was the Big Eight's domination of all areas of the industry. They enjoyed a monopoly over feature film distribution in the US and exercised indirect control of exhibition via trade practices, most notable a run-zone-clearance system that dictated the flow of film product through all of the nation's theaters, as well as block booking and blind bidding policies that forced theater owners to take a studio's entire annual output, sight unseen. The Big Five's theater chains were crucial here. Even though they comprised only about one sixth of the nation's theaters, they included most of the first-run theaters—that is, the movie palaces and deluxe downtown theaters that generated the lion's share of movie revenues, where all top features were launched. The Big Eight maintained their market controls through their trade association, the MPPDA (Motion Picture Producers and Distributors of America; later MPAA, the Motion Picture Association of America), which encouraged cooperation among the studios while fending off continual threats of government regulation and the relentless complaints from independent producers and theater owners. This effort included the creation in 1934 of the Production Code Administration, Hollywood's self-censorship office, which exercised certain constraints over movie content but defused threats of boycott by the Catholic Legion of Decency as well as threats of government regulation of movie content.

The Depression posed a more serious threat, with four of the Big Eight studios suffering financial collapse. But the studio system survived, due mainly to the support of Wall Street as well as the "national recovery" campaign of President Franklin D. Roosevelt (1882–1945), launched in 1933 when he took office, which effectively sanctioned the studio's market controls while mandating labor organization. This ensured cash flow to the studios and transformed the factory system itself from an open shop into a fully organized operation, with the division of labor now fully codified. The studios' market controls drew heavier fire as the Depression eased, however, and eventually the Justice Department demanded that the studios cease block booking, blind bidding, and other monopolistic practices. The studios failed to comply, resulting in US v. Paramount Pictures et al., an antitrust suit filed in July 1938. The resolution of the Supreme Court's legendary Paramount case changed the very nature and structure of the studio system.

THE GOLDEN AGE

That resolution was forestalled for a full decade by the studios' legal departments as well as by World War II, and in the meantime Hollywood enjoyed enormous critical and commercial success as the classical era reached a sustained peak during what is frequently referred to as Hollywood's "golden age." Essential to that success was the studio system, which reached full maturity during the 1930s as each of the Big Eight developed a distinctive house style according to its internal resources, stables of contract talent, and overall market strategy. Key here were the studios' trademark star-genre formulas—Universal's classic horror cycle with Boris Karloff and Bela Lugosi and its Deanna Durbin musicals, for instance, or Warner Bros.' gangster sagas with James Cagney and Edward G. Robinson, its backstage musicals with Dick Powell and Ruby Keeler, its swashbuckling romances with Errol Flynn and Olivia de Havilland, and its Bette Davis melodramas. Both companies also turned out a large proportion of B movies, some of which were equally formulaic and market-driven, but it was each studio's A-class star vehicles that defined its signature style and carried the freight during the classical era, moving its annual block of pictures through the nation's theaters.

Teams of top talent invariably formed around these star-genre formulas, ensuring their consistent quality and efficient output. The star was the prime component, of course, and thus the vital interdependence of the star system and the studio system. But directors, writers, composers, designers, and others were important to these units as well, with the producer serving as the administrative linchpin who oversaw production and managed relations with the executives in the "front office." The top executives, in turn, operated in tandem—and often in significant tension—with the home office in New York, which was the ultimate arbiter of fiscal policy and corporate control. But this was scarcely a top-down system in terms of creative authority. The New York office could not produce movies, nor could the studio's production executives—with the rare exceptions of truly creative executives like Darryl F. Zanuck (1902–1979) (initially at Warner Bros. and later at Fox) or David O. Selznick (1902–1965) (who was a production executive at Paramount, RKO, and MGM before launching Selznick International Pictures in 1936). This creative conflict and collaboration at all levels of studio operation, despite the ultimate authority of the owners and top studio executives, was an essential trait of the studio system. By the late 1930s, the American film industry had attained what the astute French critic and theorist André Bazin compared to "the equilibrium profile of a river," whose waters flow evenly along without disturbing its banks (Bazin, 1967, p. 31). Bazin and others saw Hollywood as having entered its classical era—a period of creative, commercial, industrial, and institutional balance, whose success was the result of "not only the talent of this or that filmmaker, but the genius of the system" (Bazin, 1968, p. 154).

That system went into high gear in the 1940s, when war-related conditions spurred an unprecedented financial boom for the movie industry—particularly for the integrated majors. During the war, the Justice Department suspended its antitrust campaign "for the duration." The US conversion to war production brought people to the major cities and put money in their pockets but severely limited their capacity to spend it (due to rationing and the dearth of goods due to the general focus on "war production"). Movies provided a prime source of entertainment and diversion, particularly in major cities where the Big Five's theater chains were concentrated and the impact of the war economy was most pronounced. The major studios responded to the overheated first-run market by focusing on A-class pictures and cutting back on B-movie production, and by focusing film content on the war itself, at Washington's insistence, turning out newsreels and documentaries in unprecedented numbers, most of them war-related, as were roughly one quarter of all features films.

Although the movie industry did record business during the war and appeared to be as strong as ever, the studio system was beginning to weaken. Some of these various factors were war related, particularly changes to the tax codes (to underwrite the defense buildup) that put top talent in the 70–90 percent tax brackets, thus encouraging high-salaried stars, directors, and producers to "go freelance" by creating independent companies, which enabled them to be taxed at the far lower capital gains rate. The first-run market surge and unprecedented premium on A-class pictures also put a huge premium on top talent, giving them the leverage to demand more independence from the studios and greater creative control over their films. Olivia de Havilland (b. 1916) successfully challenged the studios' suspension policies in the courts, severely undercutting the contract system that kept top talent tied to particular studios.

The challenges to the studio system intensified enormously after the war. Hollywood enjoyed its best year ever in terms of attendance and profits in 1946, as returning veterans and heavy courtship sustained the war boom, but in 1947 the movie industry's fortunes began to turn. In 1948, Hollywood went into an economic free fall that would continue for the next quarter century, resulting from the combined effects of suburban migration and the rapid emergence of commercial television. The crippling blow to the studio system was the Supreme Court's May 1948 Paramount decision, which demanded that the Big Five divest their theater chains and that all eight producer-distributors suspend the trade practices (block booking, blind booking) that had enabled them to control the motion picture marketplace.

THE TELEVISION ERA AND
THE NEW HOLLYWOOD

Falling attendance and the Paramount decision effectively disintegrated the studio system, depriving the studios of the economic controls that ensured regular revenues, paid the studio overhead, and thereby rationalized their factory-based operations. The major studios survived by effectively overhauling the system itself, fundamentally changing the ways they did business and establishing practices (still in use today) that dramatically reduced their controls of production and exhibition, and that reduced their out as well. This brought an end to the system of mass production that had dominated the movie industry for decades, but it was an eminently sound strategy, because the mass consumption of screen entertainment in the United States rapidly shifted from going to the movies to watching TV. Essential to the studios' survival was their collective control of distribution, the one aspect of their monopolistic operations not affected by the Paramount decision, and their willingness to share control of filmmaking with independent producers, top talent, and talent agencies. Simply stated, the studios became primarily financing-and-distribution entities, reviewing projects that were developed and packaged by the growing ranks of independent producers, then in the event of a green light, leasing their production facilities and providing a portion of the production cost in exchange for the distribution rights—and, frequently, for the eventual ownership of the completed film. The studios themselves began producing fewer, "big" pictures—biblical epics and big-screen westerns—during the 1950s, precursors of the blockbusters that now rule the industry. The studios shared control of film production not only with independent producers and freelance directors, but also top stars whose marquee value gave them tremendous leverage. And because most filmmaking talent operated freelance by the 1950s, talent agencies like William Morris and MCA (Music Corporation of America) also became a major force in postwar film (and television) production.

The major studios initially resisted but soon came to terms with television in the 1950s, selling or leasing their older films to TV syndication companies while revamping their factory-based production operations for "telefilm" series production. By the 1960s, movies were running nightly on prime time television and the studios were turning out far more hours of telefilm series than feature films. Meanwhile, movie attendance continued to erode, despite rapid population growth, and the studios gambled on high-stakes blockbusters like Cleopatra (1963) and The Sound of Music (1965) but relied primarily on television to pay the bills. Studio fortunes by the late 1960s were at an all-time low, rendering them prime acquisition targets, and many were swallowed up by large conglomerates like Gulf + Western (Paramount), Transamerica (United Artists), and Kinney Services (Warner Bros.), as well as real estate tycoon Kirk Kerkorian (MGM). The MCA-Universal merger in 1962 was the first and by far the most successful alliance at the time, due to its savvy integration of film and television operations and its maintenance of at least a semblance of the old studio-based mode of production.

Universal also spurred the movie industry's recovery with the phenomenal success of Jaws, a 1975 release that spawned a new breed of blockbusters like Star Wars (1977), Grease (1978), and Superman (1978), summer releases launched via nationwide marketing and saturation release campaigns that resulted in record box-office revenue and were the dominant, defining products of the emergent "New Hollywood." The success of this blockbuster syndrome reinforced an economic recovery in the industry that continues today, and it enabled the studios to regain some of their lost authority as well, as they became increasingly adept at transforming blockbuster hits into entertainment franchises—multimedia product lines comprised of movie sequels, TV spinoffs, video games, theme-park rides, soundtrack albums, music videos, and an endless array of licensed merchandise. Hollywood's recovery accelerated during the 1980s, fueled by a range of factors that complemented the studios' burgeoning blockbuster mentality. One factor was the rapid growth of new media technologies and new delivery systems, most notably home video and pay-cable television (i.e., subscription "movie channels" like HBO), which proved to be as hit driven as the box office. Foreign markets were equally receptive to Hollywood blockbusters, and thus the studios' international distribution operations grew steadily during the 1980s, going into high gear in the 1990s, when the fall of the Soviet Union and the concurrent economic reforms in China created a truly global market for Hollywood films.

Another crucial factor in Hollywood's continued recovery was Reagan-era economic and (de)regulatory policies, which generated a merger-and-acquisition wave that propelled the rise of global media conglomerates and fundamentally transformed the nature and role of the studio powers. The process began with News Corp.'s purchase of Twentieth Century Fox in 1985 and the launch of Fox Broadcasting (a fourth US television network) in 1986, and it accelerated in 1989 and 1990 with Sony's acquisition of Columbia, Matsushita's buyout of MCA-Universal, and the Time-Warner merger. This trend continued into the 1990s, highlighted by Viacom's purchase of Paramount Communications (formerly Gulf + Western) and Blockbuster Video, the Walt Disney Company's acquisition of "indie" giant Miramax and the ABC TV network, and Time Warner's purchase of Turner Broadcasting (with its myriad cable holdings, massive film and TV library, indie film subsidiaries, sports franchises, and theme-park operations).

In the wake of the Disney-ABC deal in August 1995, Neal Gabler, one of Hollywood's more astute observers, posited that this and other deals "mark[s] a fundamental shift in the balance of power in Hollywood—really the third revolution in the relationship between industry forces." Revolution I, he said, occurred nearly a century before, when the Hollywood studios first emerged and, in a heady churn of competition and collusion, created a system that enabled them to utterly control the movie industry for decades. Revolution II came with the post-war rise of television and the dismantling of the studio system by the courts. As the twentieth century drew to a close, deregulation, globalization, and new media technologies were ushering in Revolution III. "By combining movies, broadcast television, video, foreign video, foreign television, merchandizing, theme parks, sound-track albums, books and heaven knows what else, [Disney CEO Michael] Eisner has devised a new form of vertical integration," wrote Gabler, whose bottom-line assessment was rather simple: "The studios are back in power" (p. 15).

Gabler proved to be quite correct in terms of the latest media revolution and the return to vertical integration, but altogether wrong about the studios, which wield nowhere near the power that they did during the classical era. The conglomerate trend would continue with Time Warner's ill-fated merger with AOL, Viacom's purchase of CBS, General Electric's purchase of NBC and Universal, and countless other deals, all of which underscore the fact that power now resides not with the studios but with their parent companies, for whom "filmed entertainment" represents merely one of many entertainment divisions, along with publishing, music, television, theme parks, and the rest. The studios enjoy a privileged position in global entertainment's great chain of being because Hollywood-produced blockbusters are veritable launch vehicles for multimedia (and potentially multi-billion-dollar) entertainment franchises, and thus the key holding for any media conglomerate is a Hollywood studio. Moreover, these blockbuster films and the media franchises they spawn bring a certain logic and coherence to the parent company's far-flung operations and its diversified media divisions, creating a system of sorts in the global entertainment industry. But this is a far cry from the studio system of old, wherein the Hollywood studios themselves controlled all phases of the industry, when their chief concerns were the quality and currency of their films for a vast movie-going public and the capacity to supply (and control) the US movie market.