Printed Page 199
By the 1910s, movies had become a major industry, and entrepreneurs developed many tactics for controlling it—including monopolizing patents on film-related technologies and dominating the “three pillars” of the movie business: production (making movies), distribution (getting films into theaters), and exhibition (playing films in theaters). Controlling those three parts of an industry achieves vertical integration. In the film business it means managing the moviemaking process all the way from the development of an idea to the screening of the final product before an audience. The resulting concentration of power gave rise to the studio system, by which creative talent was firmly controlled by certain powerful studios. Five vertically integrated movie studios made up this new film oligopoly (a situation in which an industry is controlled by just a few firms): Paramount, MGM, Warner Brothers, Twentieth Century Fox, and RKO. An additional three studios—Columbia, Universal, and United Artists—did not own chains of theaters but held powerful positions in movie production and distribution.