The American Film Industry - A Model of Oligopoly
Kim R. Williamsbernard
Virginia College, Online

The American Film Industry - A Model of Oligopoly

Introduction The American Film Industry or Hollywood refers to the successful oligopoly economy of the major Hollywood studios in the 1920s to the 1940s. The term implies that it studios, so the production of films constituted the decisive factor in the economic system. But the concept of system refers here to large companies, production, film distribution / sales and film screening at this time controlled.

Vertical Integration The actual switching was indeed for most firms in New York City, but the company has production facilities in Hollywood grew up to be enormous. Mergers and acquisitions, was formed in 1920 out gradually a powerful oligopoly. The competition in the film industry in Europe has been weakened by the First World War and so many American studios took advantage of the opportunity, the demand for new films to cover most of themselves. The weakness of Edison's monopoly (MPPC) was the insufficient integration of the functional areas of the value chain. This is precisely what the new rendered large companies. Their economic power stemmed from the fact that they took over the production of films, the distribution and the distribution of films and the Exhibition or the operating theater itself, so the functional areas vertically integrated (Balio, 1985).

The Oligopoly The oligopoly among five large companies, the majors or the "Big Five" and three smaller companies ("Little Three"). The majors were Paramount Pictures, 20th Century Fox, Metro-Goldwyn-Mayer (MGM), Warner Bros. and Radio Keith Orpheum (RKO Pictures). The Big Five controlled the market, because they had the largest and most beautiful movie palaces. About 15% of all cinemas were in their possession, but they threw from about 70% of total revenue at the box office of the United States. Only in the largest American cities competed for the 'Big Five' with each other directly. Otherwise, the country was divided into areas where only one company was talking cinema. A film that was not given access to these cinemas could have no great popular success (Anderson, 1994). Also integrated into the oligopoly was the "Little Three" Columbia Pictures , Universal Pictures and United Artists , but with less influence, because they did not have its own movie theater. An independent production companies, for example appeared Republic Pictures and Monogram Pictures in appearance. Their main business was to "B-movies" to sell, which filled the theater program and it then usually in the "double" (double feature) with an elaborate "A Movie", produced by a major studio. Together, it ensured the majors in the 1930s and 1940s for 90% of American film production and 60% of world production. The vertical integration of the functional areas (production, distribution and exhibition), the premiere took place in movie theaters, of course the oligopoly.

The Oligopoly of the MPPC The first attempt to destroy free competition and an oligopoly to form was operated by means of patents. MPPC tried to impede the access of foreign companies by licensing fees through this difficult competition. In order to implement the system, should also be a high market penetration. At its height, the MPPC controlled via license most of the cinemas. Also, access to film footage was not possible without a license, as Eastman Kodak signed an exclusive contract was signed with the MPPC. The Edison Trust attacked above all the points 2-4. The system finally failed with the cancellation of Edison's patents relating to the Supreme Court of the United States, but its decline had begun much earlier (Anderson, 1994).

The Movie Theater The cinemas were a hierarchy of agreements according to their importance. In Los Angeles or New York had its premiere films in general and then underwent a period of time only in the local movie palaces ("first run"). In other major cities were then the largest centrally located cinemas, the second series of shows ("run second") instead. Then a movie was also in the smaller theaters in the neighborhoods ("Nabes") and finally, in fourth place in the rural areas and in seedy theaters ("grind houses"). Between the individual "runs" in each case there was a time, usually a month in which the film was not shown. The status of a movie theater in the wake of the tiered screening period was determined from specific geographical areas and territories. Independent cinema operators were able to show you various Hollywood movies at will, but had to film an entire package "en bloc" book. In order to offer a great program and can earn profits, the cinemas were forced to book movie packages, even if this was often, buy a pig in a poke - especially since some films had to be booked before they were shot. An umbrella organization of the major companies "was Motion Picture Producers and Distributors of America, Inc. "(MPPDA). Established to prevent government intervention into the movie business, the association was known primarily driven by the censors (" Hays Code ") (Alexander, 1998).

The Film-Makers In the early years of film industry in Hollywood (1910), the production cost relative to New York were low because the workers in the film industry still has no unions, and so possessed the salaries were kept low. After 1914, then organized a large part of American film workers. However, there were various unions, who at times worked against each other. The trade union and professional organization was an important part of the high degree of division of labor in the film industry, so that a cause of exceptional performance and high output of quality films in Hollywood. However, the division of labor enshrined provided in connection with the firmly established studio system for a certain standardization of the Hollywood film. Highly specialized and difficult to replace staff (cameramen, screenwriters, and actors with star status) were more specific guild members. It exports to foreign countries, then as now an important source of income (Allen, 1985).

The Studio System From 1933, however, increased from the beginning of the Second World War and the spread of the German Reich on into other parts of Europe, a wave of emigration began from a mostly Jewish filmmakers from Europe. Goods whose emigration objectives at the start still operate in European cities with film industry such as Vienna , Paris or London , crystallized soon the burgeoning film industry in Hollywood as a sought-famous and most promising destination of emigrants out - reinforced by targeted recruitment of European film stars of Hollywood studio executives. Of the approximately 2,000 Jewish filmmakers who were in the German Empire out of work and had to emigrate, there were eventually about 800 back in Hollywood - including almost all the elite of the German film industry of that time. Many there succeeded a glorious career that connect many, especially those in 1938 and later arrived without a job offer in Hollywood, not to her were former career and came in only in poorly paid and marginal positions or had for a while, even the movie business. Instead of the usual from Berlin and Vienna coffee houses where people met regularly once, now, large apartments and villas of successful émigrés in Hollywood, new meeting places. Popular meeting places of the film and theater professionals were the addresses of Henry Koster, Paul Henreid, German-Dryden, Ernst, Paul Kohner, and later by Sam Spiegel. The literary emigration, including writers, met frequently with Salka Viertel and Brecht (Balio, 1985).

References

Alexander, A., (1998). Media economics: Theory and practice. Mahwah, NJ: Lawrence Erlbaum.
Anderson, C. (1994). Hollywood TV: The studio system in the fifties. Austin: University of Texas Press.
Balio, T. (1985). The American film industry. Madison: University of Wisconsin Press.
Allen, R., (1985). Film history: Theory and practice. New York: Knopf.