Explain the economic organisation of Hollywood studios in the 1930s. What are the consequences of this structure on the type of films produced?

The time in the 1930s was a period when the United States economy nearly collapsed. The silent era led the Hollywood film industry to develop an oligopoly, in which small number of companies cooperated to close the market to competition. However, this caused the structure of oligopoly to change as Depression hit the US. This meant, the Hollywood Studio System was introduced in which it was ‘Hollywood’s biggest year ever, as theater admissions, gross revenues, and profits reached records levels’. (Schatz 1988:69)

There were eight large companies that dominated the industry. These were the Big Five consisting of Paramount, MGM, Fox, Warner Bros. and RKO known as the ‘Majors’ who were vertically integrated, meaning they had their own theatre chains and production space, allowing them to produce, market and exhibit all their own films. Next were ‘The Little Three’ consisting of Universal, Columbia and United Artists (UA), who were also known as the ‘Minors’, meaning that they were not vertically integrated and used Big Five’s cinemas. However, Universal and Columbia produced their own films, but United Artists distributed films made by other companies mostly indepedent.

In 1930, The Motion Picture Production Code (MPPC) was formed to regulate censorship in films. ‘The Code was an outline of moral standards governing the depiction of crime, sex, violence, and other controversial subjects… All Hollywood films were expected to obey the Code or risk local censorship’ (Thompson 2002:198). Genres like gangster and romance films withdrew from this Code with examples of Public Enemy (1931) and She Done Him Wrong (1933) starring Mae West were used this to gain market.
Mae Wet presented a formidable challenge to the MPPDA… Paramount, facing bankruptcy, hired her; for a few years she was the company’s top moneymaker... Mae West’s films continued to cause problems. Belle of the Nineties (1934) was recut at the insistence of the New York State Censorship Board. (Thompson 2002:198)
New rules were put in place in 1934, and if studios released films without MPPC approval, they were fined $25,000.

Paramount began as a distribution firm and expanded by buying up large number theatre of chains up until the Depression hit, as the company earned less money and could not pay their mortgages on the theatres they mortgaged, and declared bankruptcy in 1933, until 1936, when Paramount theatre executive Barney Balaban became president of the company and made it profitable again. Paramount
Was known partly for its European-style productions. Josef von Sternberg made his exotic Marlene Dietrich films there, Ernst Lubitsch continued to add a sophisticated touch with his comedies, and French import Maurice Chevalier was one of its major stars… The Marx Brothers made their earliest, most bizarre films there (notably Duck Soup, directed by Leo McCarey in 1933), and Mae West’s suggestive dialogue attracted both audiences and controversy. (Thompson 2010:196)
Once Balaban became president, he turned Paramount into a mainstream direction. This meant that popular actors, such as Bob Hope and Bing Crosby acted in films which made into the top box-office, and ‘studio’s popular wartime director Preston Sturges, made several satirical comedies’ (Thompson 2010:196).

MGM known as Metro-Goldwyn Pictures dominated the filmscreen, owning a small theatre chain with fewer debts. This was because of the company’s executive, Nicholas Schenck and producer, Louis B. Mayer ran their ‘West Coast studio on a policy of high profitable, big budget films’, (Thompson 2010:196) as well as creating the Hollywood star system which included top stars in Hollywood during that era, such as Clark Gable, Greta Garbo and Lioner Barrymore. MGM’s films ‘often looked luxurious than those of other studios. Budgets for features averages $500,000… Cedric