The Two Hollywoods
Chapter 1 of my ongoing book review of "The Big Picture: The New Logic of Money and Power in Hollywood", by Edward Jay Epstein
SUMMARY: A behind-the-scenes odyssey into the world of the Hollywood motion picture industry examines the complex ways in which the major entertainment empires—Viacom, Time Warner, NBC/Universal, Fox, Sony, and Disney—make their money, profiling the individuals who created these vast conglomerates and the various ways in which Hollywood has evolved to survive financially (Taken from Amazon.co.uk)
The first task the author undertakes is to give a brief outline of how the movie industry operated pre-1950s, touching on the origins of cinema exhibition and the economic and cultural importance of movies. A key distinction made early on is that, strictly speaking, moviegoers didn’t go to the cinema to see a particular film. They went to see a program that included—more or less—a newsreel, a short comedy film, a serial, animated cartoons, a B feature and the main attraction. But a crucial takeaway is that the movie studios controlled almost all of the movie theatres and looked to a "single source for virtually all of their money: The American box office" (p. 5).
In short, studios had a tremendous influence on almost every aspect of the industry. They had control over contract bookings and first-run titles, as well as actors and 'talent' (locking them contractually in what is usually known as the star system), and were relieved by the fact that distribution and marketing costs were low. They became so efficient that movies were being made in 'film factories'. By 1947, "the average cost of producing a film, including all studio overhead, was $732,000, and the average net receipts for a studio feature amounted to $1.6 million" (p. 9). But things were about to change. Communist fears were lurking in town and the 'witch hunt' was about to begin.
A modern-day 'Inquisition' developed and if an individual was found connected to anything that supported communist ideas, that person was likely to be fired from the job and was banished from the industry. According to the author (he does not provide a source for this), ex-FBI agents were hired to help "weed out employees who had a politically suspect past" (p. 11). On top of this, the Justice Department was pushing an antitrust suit against the studios that had lasted many years.
In 'Old Hollywood', adults (not children) were considered the target audience of movies. The concept of licensing intellectual property from film characters was not part of the status quo. And television was seen as an enemy. But 'one' man, who had remained sideways during the storm, had different plans. His name was Walt Disney and his cartoon film Snow White and the Seven Dwarfs (1937), "the first film in history to gross $100 million" (p. 13),1 would become a pivotal instrument to lead the way towards the 'New Hollywood' paradigm and a more profitable way of doing business.
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Dimery, Rob (19 Aug 2015). "1975: First Film to Reach $100 Million at the Box Office", Guinness World Records. Retrieved 27 Nov 2021. Link
The Guinness World Records (GWR) state that Steven Spielberg’s Jaws (1975) was the "first film to reach $100 million at the Box Office". So, who’s right? Well, both. The claims "to gross" and "to reach" don’t mean the same thing. Simply put, they are using a different metric. On one hand, Epstein is using box-office gross (money collected at movie theatres). GWR, on the other hand, is using theatrical rentals (money that the studio receives after deductions). In other words, and from the point of view of a movie studio, one figure is gross and the other one is net. Depending on the purpose of your analysis, you would use one or the other.