The origins of the American Film Industry

Between 1895 and 1930 in America the film industry emerged into a popular and important medium and by 1930, America was dominated by 'the big five' companies. 1930-1949/52 is also known as 'the Studio Era'.

The Studio System

Production line - factory-like and the casts and crew were 'contracted' by studios. There was the 'big 5' and the 'little 3' who produced 'Casablanca', 'Gone with the wind', 'Singin' in the Rain'.

Big 5-Warner bros, Radio Pictures, MGM, Paramount Pictures and 20th Century Fox.
Little 3- Universal Pictures, United Artists and Columbia (didn't own their own cinema chain and wasn't able able to show their own productions.)

Conglomerate:

A corporation which consists of a number of subsidiary companies or divisions in a variety of unrelated industries, usually as a result of merger or acquisition. They are very big companies that have often brought up or taken over smaller companies.

Vertical Integration:

The 'big 5' applied the concept of vertical integration to their businesses and this is when the company controls just about every step of the production and doesn't need to rely on any other company. The 'big 5' made films with contracted directors and actors (usually the studio owned them), distributed them with their own distributions companies and then exhibited them in their own cinema chains and this is seen in all the 'big 5' companies (Warner bros, Radio Pictures, MGM, Paramount Pictures and 20th Century Fox). 

Hollywood today

Hollywood today is different place and although some of the same studios still exist, now around 12 big ones however still control most of the money that is made in the industy. However the process of getting a film has changed. Now studios no longer make films with their own contracted directors or actors and they rather 'strike deals' based on the 'package' with independent production companies, based on the actors involved, the genre and of course the quality of the script. 

If the film gets the 'greenlight' by a studio then they will agree to finance it.

Film Profit Margins

Hollywood unfortunately are still dictated by money and hence the string of summer blockbusters that are released from around May. Many of the 'blockbuster films' are low on originality and are often remakes or sequels. 

Why do they do this?

Because it creates an almost guaranteed audience for the film and therefore generates the most income. The films that really excite the industry are the low budget 'sleeper hits' that turnover millions at the box office as these will have the greatest profit margin. 

The end of the Studio Era

In 1949 the major studios were forced to sell off the cinema chains that they owned by the US government, after a court ruling that their practices were monopolistic. The American film industry declined further in the 1950's due to the rise of television. It wasn't until the late 1980's that Hollywood studios fully recovered. 

The contemporary American Film Industry

The American film industry is now dominated by six major film companies and the contemporary Big Six account for nearly 90% of the North American film market and all of these companies are subsidiaries of major media conglomerates (all part of bigger companies). The major studios in the US are below:

Market Share:

Time Warner - Warner Brothers - 20.1%

News Corporation - Fox - 16.1%

Viacom - Paramount - 14.3%

Sony - Columbia - 14.1%

The Walt Disney Company - Walt Disney Pictures - 11.9%

General Electric - Universal - 10%