The studio system was a big part of the success of Classic Hollywood. It was a system that made sure that the biggest studios in Hollywood were in total control of the movies they made and that the movies would be distributed.
The biggest studios at that time were divided in two groups. ‘The Big Five’: MGM, Paramount, Warner Bros., RKO and Fox and ‘The Little Three’: Universal, Colombia and United Artists.
An important part of the studio system was a practice known as ‘block booking’. A studio would sell multiple films to theaters as a unit. This would typically include only one attractive, A-budget movie that the theaters really wanted and the rest would be a mix of A-budget pictures of dubious quality and lower budgeted B-movies. Because of block booking studios could make a lot of movies, most of them with a low budget and of low quality, and still be sure that they would be seen in theaters. Most film blocks contained about 20 or more features, but some theaters complained that in the most extreme cases one block had predetermined the playbill for an entire year.
Another vital part of the studio system was the fact that ‘The Big Five’ had controlling stakes in their own theater chains, which were exempt from block booking. In some cases, one studio would even control all the theaters in a city. This ensured that their films would be distributed, no matter the quality. ‘The Little Three’ would never own more than small theater circuits. By 1945, the studios owned either partially or outright 17% of the theaters in America, accounting for 45% of the film-rental revenue.
So the studios had a guarantee that their movies would be distributed. But it didn’t stop there: they also controlled the process of making the movies. They usually had the actors, producers, directors and writers under contract, owned the film processing and laboratories and created the prints. The studios were also infamous for ‘owning’ their stars, a practice that is known as the star system.
The decline of the studio system began in 1948 with the verdict in the antitrust case United States vs. Paramount Pictures, inc. This decision outlawed the practice of block booking and forced the studios to sell their theater chains. A lawsuit had already been filed in 1938 by the U.S Department of Justice, but it was settled with a consent decree in 1940, which allowed the government to reinstate the lawsuit if it had not seen a satisfactory level of compliance.
The end of the studio system also marked the beginning of the end of Classic Hollywood. A period of time from the late 20’s to the early 60’s, which is now known as The Hollywood Golden Age.
‘The Big Five’ suffered after the court decision. Because they didn’t have the assurance that their movies would be seen anymore, they had to cut back on productions and their list of stars, producers, directors and writers and made fewer movies. Paramount’s profits dropped from 20 million to 6 million dollars in one year.
But a lot of people profited from the end of the studio system. For instance: independent filmmakers and minor studios finally stood a chance and could distribute a movie without the eternal interference of ‘The Big Five’. ‘The Little Three’ became more successful as well. But soon enough the movie industry suffered a final blow that would change Hollywood forever: the rise of television……
Read more about Classic Hollywood and the Rise of Television.