Article TVE

How can new media avoid the mistakes of the Hollywood Studio System?

In recent years, it’s felt like Film and TV studio mergers and acquisitions have increased at an exponential rate, and there has been more content than ever produced by fewer and fewer players, but this model of consolidation dates back to the earliest days of cinema. In fact, in the mid 1940s only 8 studios existed in the US: Paramount, Warner Bros., Fox, MGM, RKO, United Artists, Universal and Columbia. 5 of these studios were vertically integrated, meaning they owned all aspects of the film journey, from production, through marketing and distribution, and finally exhibition. This stranglehold resulted in films being exclusive to one company. If you wanted to see a film produced by Fox, you had to see it in a Fox cinema.

These contained ecosystem structures meant that competition largely centered on releasing a better film, launching the first IP war. In a desperate effort to ensure the quality of its productions, these studios set out to mitigate creative risks. Proven screen writers, directors and actors were all signed to lengthy non-compete contracts. At the same time, studio heads enforced strict formulas for their films to follow and soon these studios each specialised in a few genres. Films were slowly becoming a reliable commodity, but one that increasingly lacked creativity and originality.  

By 1948, The US Department of Justice filed an antitrust lawsuit targeting these 8 studios, resulting in a radical restructuring of the Hollywood studio system. Known as The Paramount Decree, this new system was intended to break up the oligopoly of Hollywood studios and outlaw vertical integration of production, marketing, and exhibition, while giving independent filmmakers and smaller studios a chance to create films without being squeezed out.  

The Supreme Court’s ruling focussed on cinema exhibition, meaning new media such as streaming services and the video game industry are not bound by the same regulation, allowing contemporary audiences to experience storytelling on a huge range of platforms that utilize the same tactics of 1940s Hollywood. 

This development means we find ourselves back in entertainment’s Wild West. Back in an era where content is produced, marketed and distributed by the same company. Netflix makes shows that are only shown on Netflix, Disney makes shows for Disney+, Microsoft makes games primarily for the Xbox and Nintendo makes sure that Mario only jumps and karts on Nintendo consoles. And like before, these companies will go to great lengths to acquire the IP they need to ensure that audiences remain on their platform.  

And when they do acquire popular IP, they look to get their money’s worth.  

An evolved risk reward calculation, driven by higher production costs and increasing competition in the streaming space, focuses acquisitions on IP that will provide the biggest return. The cost of cinema tickets, streaming, and video games are rising, squeezing consumers and forcing them to make a choice about which experiences they invest in.  

Existing IP like Star Wars, Jurassic Park, or Super Mario Brothers comes with a built-in audience that is likely to keep coming back for more. It’s a successful model, but the well of existing franchises is running dry. Marvel films don’t guarantee the same audience they used to, and the slow process of creating new video games has resulted in a wash of remasters and remakes of existing games. HBO’s The Last of Us is a prime example of this re-treading of old ground but to great effect. The Last of Us proves that there’s power in these narrative universes, but also that it takes enormous effort and skill to maintain their relevance over time. The TV adaptation did a good job at reinvigorating an existing audience while introducing the IP to non-gamers. But not all studios will find the same success, and studios who are not committed to evolving source material risk homogenising their portfolio.  

More than ever, it’s crucial that streaming services and games studios learn from the mistakes of traditional media, and find ways to balance how they leverage existing IP without alienating audiences. Because if they don’t, we may see a return to a time where art felt like products on a factory line, and creative innovation was curtailed by media oligopolies.