Studio system facts for kids

A studio system was a special way of making movies where a few big film companies controlled everything. This happened mostly in Hollywood during its "Golden Age," from about 1927 (when movies started having sound) to 1948.

In this system, studios made films on their own lots, and the actors, directors, and writers often worked for them on long-term contracts. These big studios also owned or controlled the companies that distributed films and even the movie theaters themselves. This control over everything—making, distributing, and showing movies—is called vertical integration. It helped them guarantee that their films would be shown and make money, sometimes using methods like block booking (selling many films together).

During the Golden Age, eight main companies were part of the Hollywood studio system. Five of them were huge companies that owned production studios, distribution companies, and many movie theaters. These were Metro-Goldwyn-Mayer (MGM), Paramount Pictures, Warner Bros. Pictures, 20th Century-Fox (now 20th Century Studios), and RKO Radio Pictures.

Two other major studios, Universal Pictures and Columbia Pictures, were also organized this way, but they owned only a few theaters. The eighth major studio, United Artists, mainly helped independent filmmakers by financing and releasing their movies.

The studio system faced a big challenge in 1948. The U.S. Supreme Court made a ruling in a case called United States v. Paramount Pictures, Inc. This ruling said that studios could not own both the production companies and the movie theaters. This decision helped end the studio system. By 1954, with television becoming popular and the last links between studios and theaters broken, the old studio system was gone.

How Sound Changed Hollywood

The years 1927 and 1928 were the start of Hollywood's Golden Age. This was also when the studio system became very powerful. In 1927, the movie The Jazz Singer was a huge success. It was one of the first feature-length "talkies" (movies with spoken dialogue). This success greatly boosted the Warner Bros. studio.

The next year, sound movies became common across the industry. Warner Bros. had two more big hits: The Singing Fool and Lights of New York, which was Hollywood's first "all-talking" movie.

Warner Bros. used its new money to buy the large Stanley theater chain in September 1928. A month later, it bought a big part of First National, another production company. This deal gave Warner Bros. a large studio, a backlot (outdoor filming area), and even more movie theaters.

The last of the "Big Five" Hollywood studios, RKO Pictures, appeared in 1928. RCA (Radio Corporation of America) wanted to use its new sound technology, RCA Photophone, in movies. Since other film companies were signing deals with a rival technology company, RCA decided to get into the movie business itself.

RCA bought a share in Film Booking Offices of America (FBO), a small production company. Then, RCA took control of both FBO and the Keith-Albee-Orpheum theater chain. They merged these companies to create the Radio-Keith-Orpheum Corporation, or RKO. With RKO and Warner Bros. joining Fox, Paramount, and Loew's/MGM, the Big Five studios were now in place. These five studios would dominate Hollywood for the next 30 years.

Most of the studio heads, often called "movie moguls," had been in charge for a while. These included Louis B. Mayer at MGM, Jack L. Warner at Warner Bros., Adolph Zukor at Paramount, William Fox and Darryl F. Zanuck at 20th Century Fox, Carl Laemmle at Universal, and Harry Cohn at Columbia.

The Golden Age of Studios

During the Golden Age, MGM was usually the most profitable studio. Paramount was very successful in the early sound era but then slowed down for a while. Fox was often the second most profitable. RKO was usually the least profitable of the Big Five.

Hollywood's success actually grew during the Great Depression. Movies offered a way for people to escape their problems. President Franklin Delano Roosevelt once said that for just 15 cents, people could go to a movie, see Shirley Temple's smiling face, and forget their troubles.

By 1939, there were 15,000 movie theaters in the United States, which was more than the number of banks! The movie industry was very big. Top stars like Bing Crosby and Claudette Colbert earned more than $400,000 a year, which was a huge amount of money back then.

How the Studio System Ended

One way studios made money was through block booking. This meant they sold groups of films to theaters as a package. For example, a theater might have to buy five films at once. Usually, only one of these films was a big hit, while the others were less popular or "B movies." Life magazine once wrote that this system produced "uniform mediocrity" but was "uniformly profitable."

On May 4, 1948, the U.S. Supreme Court made a big decision. In the Paramount case, they ruled that block booking was illegal. The court said that the big studios were breaking antitrust laws because they controlled too much of the movie business. The court suggested that studios should be forced to separate their movie-making business from their theater-owning business. This separation was called divorcement.

The studios wanted to fight this decision, but something unexpected happened at RKO. Howard Hughes, a rich businessman, bought a controlling share of RKO. Since RKO owned the fewest theaters among the Big Five, Hughes thought that separating the studio from its theaters could actually help RKO compete better.

Hughes agreed with the government to split RKO into two separate companies: RKO Pictures Corporation (for making movies) and RKO Theatres Corporation (for owning theaters). He also agreed to sell his share in one of them. Hughes's decision made it harder for the other Big Five studios to argue against divorcement.

Hughes's agreement, signed on November 8, 1948, was a major turning point. Paramount soon followed, agreeing to a similar deal. Paramount became the first major studio to completely separate its movie production from its theaters by the end of 1949. By this time, there were 19,000 movie theaters in the U.S.

The studio system slowly faded over the next five years. The smallest major studio, United Artists, adapted well. It cut costs and started working more with independent filmmakers, often investing directly in their projects. This became a model for Hollywood in the future. The studio system finally ended in 1954 when Loew's, the last holdout, separated from MGM.

Howard Hughes's actions helped break the studio system, but they didn't help RKO much. His difficult leadership and the rise of television hurt the studio. RKO struggled and eventually stopped making movies in 1957, selling its main facilities to Desilu, the company owned by Lucille Ball and Desi Arnaz. By 1959, RKO left the movie business completely.

Studio Systems Around the World

While the studio system is mostly known for Hollywood, similar systems existed in other countries. For example, in Britain, two companies, the Rank Organization and the Associated British Picture Corporation, had full control over making, distributing, and showing films.

Other countries with similar systems included Germany in the 1920s (Ufa), France in the 1930s (Gaumont and Pathé), and Japan (Nikkatsu, Shochiku, and Toho). In Hong Kong, Shaw Brothers used a studio system for its wuxia films in the 1950s and 60s. India, which has a huge film industry, has never had this kind of fully integrated studio system.

For instance, in 1929, nearly 75% of Japanese movie theaters were connected to either Nikkatsu or Shochiku, the two biggest studios there.

After the Studio System

In the 1950s, Hollywood faced three big problems: the end of the studio system, the new popularity of television, and people having more money to spend on other fun activities. It became harder for movies to make a medium amount of money; they were either huge hits or big failures. By 1957, Hollywood was making only about 300 feature films a year, compared to about 700 in the 1920s.

After the studio system ended, most actors became freelancers, meaning they worked on a project-by-project basis instead of having long-term contracts with one studio. People who funded movies increasingly wanted famous actors, directors, and writers for their projects to reduce the risk of losing money.

Also, the international market became very important, bringing in 40-50% of Hollywood's total income by 1957. This also made star names more important for attracting audiences. Stars gained more power and often chose to receive a percentage of a film's profits instead of a fixed salary. For example, Cary Grant earned over $700,000 from his 10% of the gross for To Catch a Thief (1955), while the director, Alfred Hitchcock, earned much less.

By 1957, independent producers were making half of all full-length American films. Top actors like Gregory Peck and Frank Sinatra even started their own production companies. Studios began to focus more on funding and providing facilities to independent producers, rather than making all their own films. Television, while a challenge, also helped save the industry by using studio facilities for TV show production.

Modern Hollywood

In the early 1960s, major studios started re-releasing older films for TV and mainly produced movies for television or lower-budget films. The industry went through a tough time but later recovered with successful films like The Godfather (1972).

Steven Spielberg's Jaws (1975) and George Lucas's Star Wars (1977) changed how movies were released. Before Jaws, films usually opened in a few big cities and then slowly spread to other areas. Jaws was released in hundreds of theaters at the same time, with a large TV advertising budget. This became the new way to release "blockbuster" movies.

From 1990 to 1995, Hollywood became dominated by large media companies. Today, three of the original Golden Age studios—Universal, Paramount, and Warner Bros.—are still major players. However, they are now owned by much larger media groups. Disney's Walt Disney Studios has also become a major studio, and Sony Pictures (which includes Columbia and TriStar) is another big one. After Disney bought 20th Century Fox in 2019, there are now five major studios again.

Most of these modern studios act more like the old United Artists. They mainly finance and distribute films made by others, rather than producing everything themselves. They also lease out their physical studio spaces.

The Rise of Independent Films

In the mid-2010s, major studios started focusing on making big mainstream films like sequels, 3-D movies, and superhero films. While some of these are huge hits, others can lose a lot of money. This shift has led to a "Second Decline" in movie theater attendance, as many audiences are less interested in these types of films.

This decline has created an opportunity for independent companies to make different kinds of movies. In recent years, independent films have won many major awards, including the Academy Award for Best Picture. The Academy Awards often honor films that are seen as high quality and meaningful, rather than just popular blockbusters.

Recent independent film winners like Spotlight (2015), Moonlight (2016), Parasite (2019), and CODA (2021) have shown that success doesn't depend on special film formats like 3-D or IMAX.

The recent COVID-19 pandemic has also changed how people watch movies. More and more audiences are now choosing to watch films on streaming services like Netflix, Hulu, and Apple TV+ instead of going to movie theaters.

See also

• Classical Hollywood cinema
• Hays Code
• Pre-Code Hollywood