A movie studio is a location, room, building, or group of buildings and/or sound stages, offices and storage facilities, which may include a backlot, where movies are made. It is also the company that produces, promotes and distributes movies.
In 1893, Thomas Edison built the first movie studio in the USA when he constructed the Black Maria, a tarpaper-covered structure near his laboratories in West Orange, New Jersey, and asked circus, vaudeville and dramatic actors to perform for the camera. He distributed these movies at vaudeville theatres, penny arcades, wax museums and fairgrounds. Other studio operations followed in New Jersey, New York City and Chicago.
But in the early 1900s, companies started moving to Los Angeles, California, because of the good weather and longer days. Although electric lights existed at that time, none were powerful enough to adequately expose film; the best source of illumination for motion picture production was natural sunlight. Some movies were shot on the roofs of buildings in Downtown Los Angeles. Another reason that early movie producers located in Southern California was to escape Edison's Motion Picture Patents Company, as he owned almost all the patents relevant to movie production at the time. The distance from New Jersey made it more difficult for Edison to enforce his patents.
The first movie studio in the Hollywood area was Nestor Studios, which was opened in 1911 by Al Christie for David Horsley. In the same year, another fifteen Independents settled in Hollywood. Other studios eventually settled in such towns and districts in the Los Angeles area as Culver City, Burbank and Studio City in the Valley.
The advent of the talkies in the late 1920s launched a round of mergers in the movie industry, reshaping the Hollywood studio system. Five large companies, Fox (later 20th Century Fox), Loew’s Incorporated (later Metro-Goldwyn-Mayer), Paramount Pictures, RKO (Radio-Keith-Orpheum) and Warner Bros., functioned as producers, promoters, distributors and exhibitors. Universal Studios, Columbia Pictures and United Artists were also important, but exerted less control since they did not own their own theaters to play only the movies of their own studio and movie stars.
The Big Five's studio owned theaters were opposed by eight independent producers, which included Samuel Goldwyn, David O. Selznick, Walt Disney and Walter Wanger , and in 1948 the U.S. government won a case against Paramount in the Supreme Court, the ruling being that this high level of power constituted a monopoly and was therefore against the law. This decision effectively ended the studio system and The Golden Age of Hollywood.
With the collapse of the Hollywood studio system because of antitrust, movie production was taken over by companies that put together teams on a project-to-project basis, usually renting space from some of the great studios of the Golden Age, which is still the norm today.
By the mid-1950s, when television proved a profitable enterprise that was here to stay, movie studios started also being used for the production of programming in that medium. Some studios established their own TV production units, such as Columbia with Screen Gems.
Movie studio distribution
According to a 2000 study by ABN AMRO, only about 26% of Hollywood movie studios' worldwide income came from box office ticket sales; 46% came from VHS and DVD sales to consumers; and 28% came from television (broadcast, cable, and pay-per-view).
Once a movie is completed, the movie studio first releases the movie to theaters, typically opening the movie as widely as possible (over 3000 screens for the largest blockbusters), and backed by a very widespread and expensive television advertising campaign. Attendance for an attractive movie is typically highest in the first week of release, and drops substantially with each successive week. Movie theaters pay a percentage of movie ticket sales to the movie studio as the film rental fee. This percentage can be as high as 90% for certain blockbuster movies, and the percentage drops with each successive week the movie is shown; the average percentage due to the movie studio is about 55%.
This differs from the practice decades ago in the United States, when a movie was released in a few dozen theaters and spread after receiving good "word of mouth" and good reviews, moving around the country for several years.
After the movie's theatrical run is almost completely spent, the movie is introduced for sale and rental to consumers, on VHS and DVD. For about six weeks, this is the only way potential customers can watch the movie.
After the six-week protected window on video, the movie is shown on pay-per-view stations (both on cable TV and satellite TV) for a period ranging from 2 to 6 weeks. The studio gets around 50% of the resulting income.
After the 2 to 6 weeks of exclusive pay-per-view showing, the movie is shown on premium pay TV channels, like HBO and Showtime. The movie studio receives a fixed payment based on the movie's previous performance in theaters, averaging from US$6 million to US$8 million, and reaching US$25 million for some blockbusters.
After about 18 months of showing on premium pay TV channels, the movie appears on network television or on a basic cable channel (like TBS, TNT, or USA Network) for 12 to 18 months. The network typically pays from US$3 million to US$15 million, depending on the movie and the number of runs.
After the network television runs are complete, the movie goes into television syndication for broadcast and/or basic cable television, receiving payments based on the size of the market that sees the movie, and ranging up to US$5 million in the largest markets.
Some early movie studios
PBS Frontline, "the monster that ate hollywood"