7.2 — Hollywood and the World's Studios

An industry that moved across a continent to escape a patent, invented a system for manufacturing films, had that system broken by a court, and rebuilt itself around a different set of constraints.

Why Hollywood

Why is the film industry in Los Angeles?

Sunlight, geography, and a patent dispute — and the patent dispute is the part that gets left out.

Early film production was concentrated in New York and New Jersey, near Edison's laboratory. Edison and the major manufacturers formed the Motion Picture Patents Company in 1908, pooling patents on cameras, film stock and projectors, and using them to control who could make films and on what terms. Independent producers were sued, and there are well-documented accounts of equipment being seized and shoots disrupted.

Southern California was about as far from New Jersey as it was possible to get inside the country, with a federal court circuit historically less friendly to the patent pool and, if all else failed, the Mexican border a few hours away.

The other reasons are real and would not have been sufficient alone. Sunlight: film stock was slow and early studios shot outdoors or in glass-roofed buildings, and Los Angeles has around 300 usable days a year against New York's far fewer. Terrain: within a short drive there is desert, mountain, forest, ocean and orchard, so almost any location could be faked locally. Cheap land and non-unionised labour in a growing city.

Hollywood itself was a small temperance settlement that had been annexed by Los Angeles in 1910. The sign on the hill originally read HOLLYWOODLAND and was an advertisement for a housing development, put up in 1923 and intended to last about eighteen months.

What was the studio system?

A model in which one company controlled the entire chain: it employed the actors, writers, directors and technicians on long-term contracts, owned the studios and equipment, and owned the cinemas the films were shown in.

That last part is what made it work. A studio could guarantee a market for its own output, so it could plan production like manufacturing: a set number of films per year, in defined genres, with contracted stars assigned to them.

Actors had almost no power in it. A contract typically ran seven years, bound the actor to whatever roles the studio assigned, permitted lending them to other studios for a fee the actor did not share, and could be extended as a penalty for any suspension. Olivia de Havilland sued Warner Bros. over exactly that and won in 1944, in a case that is still called the De Havilland decision and which limited such contracts to seven calendar years.

The system ended by court order. In 1948 the Supreme Court ruled in United States v. Paramount Pictures that studios owning cinemas and forcing them to take bundled films was an illegal restraint of trade. Studios had to sell their cinema chains, the guaranteed market disappeared, and within a decade the long-term contract system had collapsed. Television arrived at the same moment.

What was the Hays Code?

A set of content rules the industry imposed on itself from 1934 to avoid government censorship, and it shaped what American films could say for thirty years.

It prohibited a long list of specifics — nudity, profanity, depiction of drug use, ridicule of religion, interracial relationships — and, more consequentially, imposed a moral structure: crime could be shown but had to be punished within the film, and no film could be made that would "lower the moral standards of those who see it".

Its effect was not only prohibition. It produced a whole grammar of implication — the cut away to a fireplace, the couple in separate beds, the fade to black — and writers became extremely good at getting past it. Some of the most admired dialogue of the period is innuendo constructed to survive a censor.

It collapsed in the 1960s under pressure from foreign films that ignored it, television competition, and film-makers who released without approval and were successful anyway. It was replaced in 1968 by the age-rating system that still exists.

The rest of the world

Which countries make the most films?

India makes the most films per year by a wide margin — typically between 1,500 and 2,000 feature films, across more than twenty languages. Nigeria's industry, Nollywood, is second by volume, producing a very large number of low-budget films distributed originally on video and now through streaming. The United States leads on revenue, and China is the largest or second largest box office market depending on the year.

Those three facts describe three completely different industries: one that makes a lot, one that earns a lot, and one that sells a lot of tickets.

What is the difference between Hollywood and European cinema?

Mainly how films are financed, which then determines what they can be.

American films are financed as commercial investments and must recover their cost from ticket sales and downstream rights, which pushes towards broad appeal, established genres and stars. European film industries are substantially subsidised by national and EU funds, film boards and broadcaster obligations, and by systems such as France's levy on cinema tickets that funds new production.

That is why European cinema can support films with no commercial prospect at all, and why it produces both a great deal of the world's most admired work and a great deal that almost nobody watches.

The French are the most explicit about it, treating cinema as a cultural exception — a category deliberately kept outside trade liberalisation, on the argument that culture is not merely a product. That position has been the subject of trade disputes with the United States for decades.

What is the French New Wave, and why does everyone mention it?

A group of French critics who became directors in the late 1950s and changed how films are made, largely by not being able to afford to make them the old way.

Truffaut, Godard, Chabrol, Rohmer and Rivette had been writing for the magazine Cahiers du Cinéma, where they developed the auteur theory — the argument that a film's director is its author in the way a novelist is a book's, and that a director's whole body of work can be read for a consistent personality. They applied it aggressively and provocatively to American genre directors that critics had dismissed.

When they started directing, their constraints produced the style: hand-held cameras, real locations instead of sets, natural light, non-professional actors, direct sound, and visible jump cuts where a conventional film would have covered the join. Godard's Breathless (1960) is the standard example, and its jump cuts were reportedly the result of having to shorten an over-long film by cutting within shots rather than reshooting.

The influence is enormous and largely invisible now because it was absorbed: shooting on location with available light is simply how a large fraction of films are made, and the American directors of the 1970s — Scorsese, Coppola, Altman — took it directly.

What is Italian neorealism?

Films made in the wreckage of the Second World War, with no studios, no money and no stars, about ordinary people in the immediate present.

Bicycle Thieves (1948) is the film usually named: a man whose bicycle, and therefore his job, is stolen, searching Rome with his son. The lead was a factory worker with no acting experience. The films were shot in the streets with non-professionals because Cinecittà, the Italian studio complex, was being used as a refugee camp.

The movement lasted less than a decade and its influence is disproportionate. It is the ancestor of a great deal of world cinema — Satyajit Ray saw Bicycle Thieves in London and has said it decided him to make Pather Panchali, which is where 7.3 picks up.

Which national cinemas should you know about?

Japan: Kurosawa, Ozu and Mizoguchi in the 1950s. Kurosawa's Seven Samurai was remade as The Magnificent Seven, and Yojimbo as A Fistful of Dollars — the latter without permission, resulting in a successful lawsuit. Ozu's work goes the other way: static low camera, domestic scale, and an influence on slow cinema everywhere.

Iran: a cinema of extraordinary quality produced under heavy state censorship, which has pushed film-makers towards children, rural settings and ambiguity. Abbas Kiarostami and Asghar Farhadi are the internationally known names; Jafar Panahi has made several films while formally banned from making films.

South Korea: from the late 1990s, a rapid rise driven partly by a domestic screen quota requiring cinemas to show Korean films for a set number of days a year. Parasite winning Best Picture in 2020 was the first non-English-language film to do so.

Hong Kong: martial arts and action cinema whose choreography and camera work reshaped how action is shot worldwide, and whose directors and stunt teams were subsequently hired by Hollywood.

How a film gets made

Who actually does what on a film?

The credits are opaque, and a handful of definitions make most of them readable.

The producer finds the money and is responsible for the film existing. The executive producer is often a financier or a name attached for credibility rather than a working role. The director makes the creative decisions on set. The screenwriter writes the script, frequently one of several in sequence, which is why writing credits are arbitrated by a guild rather than agreed.

The cinematographer, or director of photography, is responsible for the image — camera, lens, lighting and composition — and works with a gaffer, the chief electrician, and a key grip, who handles everything the camera and lights are mounted on. The best boy is the deputy to either.

The editor assembles the film and has more effect on the finished result than almost anybody realises. The production designer is responsible for everything in front of the camera that is not an actor. The first assistant director does not direct — they run the schedule and the set, and they are why a day of shooting happens at all.

A grip moves things that support equipment; an electric moves things that produce light. The distinction is jurisdictional and strictly observed.

Why does a film cost so much?

Because it is a construction project with a payroll of several hundred people that has to be built and demolished on a schedule.

The largest costs are usually above the line — the director, principal cast and rights — and below the line everything else: crew, equipment, locations, sets, transport, insurance. Visual effects have become one of the largest single line items on blockbusters, and the industry that produces them operates on fixed-price bids with unlimited revision requests, which is why VFX houses go bankrupt with regularity even while working on the highest-grossing films ever made.

Marketing is frequently as large as production and is not counted in the quoted budget. The rule of thumb is that a film needs to gross roughly two to three times its production budget to break even, because cinemas keep about half of ticket revenue and marketing has to be recovered on top.

"Hollywood accounting" is a genuine and litigated practice: a studio charges the film a distribution fee, interest on its own financing, and overhead, structured so that a film with enormous revenue reports a net loss on paper — which matters because participation deals are often written against net profit. Return of the Jedi is the standard cited example of a film that has officially never gone into profit.

What comes next

The next page is the industry that makes more films than any other, and whose relationship with its audience is unlike anything in the West.