Acheson, Keith
Maule, Christopher J.
2005
Understanding Hollywood’s organisation and continuing success in Sedgwick, J et al ~ An Economic History of Film

312
“With respect to American dominance, we argue that a flexible managerial culture and an open and innovative financial system allowed the American industry to take advantage of a series of historical events and technological developments.”

315
“Unlike the manufacture of a dress or car, where the end product conforms closely to a drawing or blueprint and the cost estimates are reliable, a film script evolves during the process of making the film and the only definitive script is the one written after the negative has been produced.”

316
There are 4 risks in filmmaking:

1. selection of a concept and script
2. intrinsic to production: development of concept, creatiion of budget, negotiation of contracts
3. extrinsic to production: bad weather, illness, accidents, governmental actions, malfunctioning equipment
4. piracy

324
“The speed and reliability of the popcorn machine is often as important to economic viability as the quality of the picture being shown.”

325
“…movie making is not a systematised process in which ordered routine can prevail, or in which costs can be absolute and controlled. Too many things can and do go awry. . . . Movies are made by ideas and egos, not from blueprints and not with machines.”

326
“In the United States, these arrangements have been identified with three periods associated with pre-studio (to about 1920), studio (approximately 1920 to 1960) and post-studio (since 1960) production.”

327
“Over time, Hollywood has developed an organisational structure that is effective in selecting persons who can manage the relationship among different professional cultures – the financiers, those like Mayer in charge of making the films, and the artistic talent and key inputs employed.”

328
“Consequently, the distribution of revenue from the cinematic release has a disproportionate effect in shaping the overall distribution of revenues.” “To reduce risk, large-budget films are often only innovative on the surface. Under this veneer lie concepts or formulae that have been successful in the past.”

329
“Cross-marketing enables firms to garner revenues from related markets and increases the possibility of making profits on a film. The more successful a film is at the box office or on television, the more likely it is to make money in other markets.” “Increasingly, theatrical release is the vehicle to advertise and promote subsequent and related markets, in the same manner that the live rock concert is used to promote compact disc, tape and record sales.”

332f
“Why Hollywood?… Our explanation of the latter rests on three pillars”:

1. cumulative impact of historical events, particularly the two world wars
2. rapid commercialisation of new technologies made possible by the fortuitous conjunction of an aggressive, marketing oriented managerial culture and an open financial system
3. ethnic diversity, language homogeneity and size of the American market

338
“We anticipate that a number of internationally integrated distribution systems will be able to compete and survive in this environment. The dynamics of this greater competition may provide producers with more choices and viewers with more diverse viewing options.”

Conclusion 338-339:
“The process of filmmaking has led to a set of organisational and contractual arrangements that have been adapted to changing technology and evolved over time to address the predominant risks faced by the industry, especially the risks of piracy, cost containment, opportunism, commercial failure and their interaction.”
“The informational problems faced by the industry favoured integrated international marketing of films and related merchandise and close financial ties between the international distributors and producers. Whether this integration occurred through contract or ownership depended on the balance of advantages of the two modes and the stance of the competition policy authorities. Contract provides an effective alternative to ownership for film production and cinematic distribution, whereas large entities continue to dominate the distribution function.”
“Our conclusion is that the domination of the international aspects of the film industry by one system is based on the efficiency of that system.”
“We argue that a number of factors contributed to American dominance … The United States was also the largest single market in the largest language market from a revenue perspective. At the same time, the United States had assimilated large blocks of viewers from different ethnic backgrounds. Films produced for this market had to cross cultural boundaries and therefore were easier to export. The American managerial and financial cultures were conducive to the development of contractual and institutional relationships that permitted the financing and distribution of films on a large scale.”
“Perhaps because the industry was successful internationally from the beginning, the United States government did not feel the need to adopt content quotas or distributional and cinematic restrictions. Such policies have been adopted at one time or another in one form or another by almost every other country. We believe these policies were not successful because they ignore the organisational basis for the American success.”
“If the technologically driven increase in capacity results in an expansion of the international segment of the industry, competition from systems other than the American should develop. This competition will be good for consumers in terms of price but will still be based on mass-appeal formulaic audio-visual material. The experimental, novel and socially challenging content will emerge from the local and regional film segments as they do now. The two genres may not be as distinct as before. The international industry may provide a uniform skeleton on which local creators can add distinctive material or interacting viewers, choosing from locally or internationally provided menus, can make creative decisions.”
“To our knowledge, no other industry has been persistently dominated in the same manner.”