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An important force reshaping the Hollywood system took form in the wake of the Paramount decision. This 1948 court ruling (fueled by the government’s discomfort with the movie industry’s power) forced the big, vertically integrated studios to break up their ownership of movie production, distribution, and exhibition. The studios eventually gave up their theater businesses.

The ruling never really changed the oligopoly structure of the Hollywood film industry, because it failed to weaken the industry’s control over movie distribution. However, it did open up opportunities in the exhibition pillar of the industry for new players outside Hollywood. For instance, art houses began showing more documentaries or foreign films, and thousands of new drive-in theaters sprang up in farmers’ fields—all of which offered alternative fare to moviegoers.