The Movies Become Big Business

During the 1920s the American film industry developed into a strong oligopoly. Ownership of a large theatre circuit provided each verticallyintegrated Hollywood firm with significant monopoly power. Historian Lewis Jacobs, using a demand-oriented model, argues that since patrons were willing to pay high prices to see first-run films, the large film producerdistributors purchased theatre chains to control access to their customers. Such an explanation is one-sided: were theatres acquired regardless of expense? I think not; motion picture capitalists sought profit and growth, and hence were quite conscious of costs. Second, Jacobs's (implicit) model ignores issues of organization. How did Hollywood utilize their new theatre holdings to garner higher profits? In this article I argue that during the 1920s the U.S. film industry became a complete big business by adopting the strategy of the chain store. Hollywood-owned circuits increasingly presented a more standardized product, on a national level, at decreasing cost-all directed by a central authority in New York. Exhibition was the branch of the industry which could most easily adopt big business practices, and thus accumulate the greatest excess profits. Sam Katz, president of the Publix circuit, pushed most strongly for the chain store system, and by 1929 Publix had become the most powerful theatre organization in U.S. film industry history

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• Is Hollywood America? The trans‐nationalization of the American film industry

  Frederick Wasser•Critical Studies in Mass…•1995

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