Studio System Hollywood

"Economic Control of the Motion Picture Industry", Mae Huettig (1944)

Hollywood "a large inverted pyramid, top-heavy with real estate and theaters, resting on a narrow base of the intangibles which constitute films."

Therefore – exhibition, not production, was the crux of the motion-picture business.

This had a control corollary:

- Hollywood run from New York by execs close to Wall St., publishing and Broadway.

- Those in charge of exhibition knew what the public wanted.

- Those in charge of distribution knew what those in charge of exhibition wanted.

- Ultimate decision on making pictures laying with CEO who:

- determined A and B picture budgets

- how much to spend on prestige pics

- tentative production schedules

Only at this point did a Hollywood based production dept. enter the fray.

"To recap, executives far removed from Hollywood were able to make key policy-making decision, affecting production because they were closest to the principal source of income – theater admission."

Tino Balio – "Grand Design"

Huettig also asked about the relationship between:

- the operations of the majors

- who ran the picture companies and

- the kinds of pictures that got made

Key factors:

- The Majors owned substantial theatre chains

- The Majors raised the cash to acquire these chains through the public sale of bonds and stocks pre-1929 taking on long term debt (reflected in presence of investment bankers, businessmen etc. on Motion Picture Company boards)

- Therefore "The production of films, essentially fluid and experimental as a process, is harnessed to a form of organisation which can rarely afford to be either experimental or speculative because of the regularity with which heavy fixed charges (debt) must be made." (Huettig)

What kinds of theaters did the majors own:?

Affiliated chains ranged from 200 – to 1500 theaters in size – accounting for 20% of total US cinemas.

HOWEVER – these cinemas accounted for 80% of 1^st-run houses and the most profitable subsequent run houses (generally located in major metropolitan areas).

Thus – these theaters accounted for 50% - 80% of the B.O. in any given market.

Only in largest cities did majors’ theaters compete directly. Elsewhere they pooled their product for nationwide distribution. Thus one companies hit benefited all theatres.

Thus Huettig concluded that production and distribution were only important to the extent they enabled the majors to maintain their favoured status in exhibition.

How to account for the "Little Three" – Universal, Columbia and UA with very few theaters?

A: No one studio had the capacity to produce sufficient films to fill its subsequent run theaters which needed up to 300 pics per annum. The little three filled this gap. Columbia and Universal mainly made B-pics for the low end of the market. UA was purely a distrib. for "a small group of elite independent producer."