The studio system has its roots in the principles of Henry Ford, whose success in the automobile industry led other industries to adopt his assembly-line production process. The high risks and costs associated with making movies led the studios to adopt more controlled, streamlined processes.
After the Wall Street crash of 1929, the eight major movie studios developed the contract system (Lewis 102-103). All people associated with making a movie (writers, directors, actors, technicians, etc.) worked on an exclusive contract with the studio. Studio executives managed the production of the movie and the labor force. It was a top-down style of management that included a General Manager, Executive Manager, Production Manager, Studio Manager, and individual unit production supervisors (Barsam 470).
“The studio used its contracts to control production costs and efficiently staff the production teams at work on its slate of films” (Lewis 103). The result was a polished product which reflected the individual style of each studio. These contracts only worked one way, however. The employee was required to work for the studio according to the terms of the contract. But the studio had the option of cancelling a contract at will.
The studios cranked out quantities of movies (538 movies were produced in 1937) (Barsam 473), but they were not so concerned with quality. After World War II, the number of movies produced in 1946 fell to 370 (Barsam 473).
Three factors ultimately led to the downfall of the Hollywood studio system: studios had become such efficient production machines, they no longer needed big name central producers; the rise of the labor unions and the government’s interference in their monopoly over production, distribution, and exhibition; “the studios began to reorganize their management into the producer-unit system” (Barsam 474).
Additionally, the creative talent—writers, directors, actors, etc.—demanded contracts that would allow for more creative freedom and better quality of movies. World War II profoundly impacted the number of personnel and film supplies available to make movies. And finally, the invention of television created a new form of competition (Barsam 474).
The glamorous Golden Age of Hollywood was supported by the studio system, which controlled all means of movie production, distribution, and exhibition. As the world and technology changed, the studio system was forced to change, too.
Dawn Pisturino
Thomas Edison State University
December 21, 2017
Copyright 2017-2021 Dawn Pisturino. All Rights Reserved.
Works Cited
Barsam, Richard, and Dave Monahan. Looking at Movies, 5th ed. New York: Norton, 2016.
Lewis, Jon. American Cinema: A History. New York: Norton, 2008.
Dawn Pisturino's Blog 
As an artist one has come to understand, efficiency, vested interests, political interference and “organised” creativity does not fair well to serve the idea of beauty. Sadly Hollywood’s overproduction in trash and banality speaks for itself.
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Yes, I hear that more and more from people, even ones who are not artistic. It seems like we all have to die before we are appreciated. And that’s sad!
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