The Studio System: Old Hollywood vs. New

by Jennifer Billips

We’ve previously discussed the organization of the independent film industry, so basically, in this presentation I’m just going to discuss the development of the studio system in the American film industry, moving from the inception of a very rigid, contractual and monopolistic system in the 1930’s to the extraordinarily different system that we find in place in Hollywood today (in such unique studios as DreamWorks SKG.)

By 1930, 5 "Major" studios – MGM, Paramount, Warner Bros., 20th Century-Fox and RKO – as well as 3 "Minor" studios – Universal, Columbia and United Artists – had firmly established themselves within the American film industry. What differentiated the 3 "minor" studios from the 5 "major" studios was that they owned no theater chains, and so were largely dependent upon the major studios for distribution purposes. Each studio was known for a particular style or genre; i.e. RKO was known for Fred Estaire-Ginger Rogers musicals, MGM films were "characterized by optimism, materialism and romantic escapism" (Cook 286). Each studio held certain stars (actors and directors) under contract for a predetermined number of as-yet-unnamed films (the stars themselves could be temporarily loaned out to other studios). The reason they could do this was because, typically, contracts were long-term, renewable every six months during the first year after signing the contract and every year thereafter. In addition to providing stars with job security, long-term contracts cut down on negotiating costs and guaranteed studios exclusive rights to and control over the performer. 

This system remained in place until 1948, by which point the federal government had raised and concluded a case against all 8 studios, effectively claiming that they had possessed a monopoly over motion picture production, distribution and exhibition since the early 1930s; this meant studios were forced to hand over ownership rights to theater chains
(so that they could maintain control over the actual creation of their films)– this was the beginning of the end of the Hollywood studio system, as it eliminated a guaranteed weekly audience and income.

As author David Cook says in his book A History of Narrative Film, "The fifties in general [became] the transitional period ‘from studios who owned stars to stars who owned pictures.’" (513)

For the most part, though some studios either went out of business, were ultimately absorbed into larger conglomerates or were taken over by other companies (i.e. RKO went bankrupt and Columbia was ultimately dominated by the Sony Corporation), most of the same studios that functioned in Old Hollywood still survive to this day.

Whereas in the ‘30s and ‘40s, actors and directors were placed under long-term contracts, actors and directors in the contemporary film industry are placed under short-term contracts in which star and studio mutually agree to develop a set number of specific, titled films, or films in a sequence (recent recognizable examples include Star Wars, Lord of the Rings and The Matrix trilogies). There are no longer any loyalties between stars and production companies, leaving individuals free to float around Hollywood.

Studios under the old system independently financed their own films, though typically studios in this day and age share financing and risk with multiple partner companies. This is especially true of DreamWorks SKG, backed by 3 Hollywood heavyweights (Steven Spielberg, Jeffrey Katzenberg and David Geffen) but nevertheless a fledgling company. Titanic was produced by both 20th Century Fox and Paramount, Saving Private Ryan was produced by DreamWorks and Paramount, A.I. was produced by DreamWorks and Warner Brothers.

Additionally, whereas Old Hollywood studios deliberately appealed to specific audiences by producing specific types of films, author Timothy Corrigan maintains that "[New Hollywood studios appeal to and aim at] not just the largest possible audience…but all audiences….Contemporary movie culture thus necessarily aligns itself with advertising, not only as a method to abate costs (by advertising other people’s products on the screen: cars, soft drinks, and so on), but because blockbuster movies can themselves succeed only as an advertisement of a product that, in appealing to everyone, can never possibly satisfy an audience of different individuals" (Corrigan 47-48).

DreamWorks SKG has certainly proved itself to be a producer of blockbusters (films that are either enormously popular or that were so costly to produce that they must be enormously successful to make a profit), having recently released a string of popular and financial hits such as Saving Private Ryan, Gladiator, American Beauty, and, more recently, Shrek.

Finally, in addition to producing films, Warner Brothers, MGM, Paramount and Universal have all also become involved in music and television production, though DreamWorks SKG notably sticks primarily to films (a fact that many concede will be the downfall of the studio). However, the studio has begun to challenge Disney’s hold over the animation industry, having recently built a new animation studio in L.A. and hiring a small army of animators to help start the creative juices flowing.

Bibliography

Cook, David A. A History of Narrative Film. New York: Norton & Company, 1996.

Corrigan, Timothy. "Auteurs and the New Hollywood." The New American Cinema. Ed. Jon Lewis. London: Duke UP, 1998. 38-63.