Tel-T 207 1st EditionLecture 13Outline of Last Lecture I. MidtermOutline of Current Lecture II. Early Hollywood Sets the Stage for Modern VideoCurrent Lecture- Early Hollywood sets the stage for Modern Videoo Early video evolved from technologyo The technology is key to this market Early power was vested in the inventors and manufacturerso Film Patent Trust vs. The Pirates Pirates- Europeans came over and couldn’t enter the industry and there were some Americans that wanted to do their own thing- Fled to LA because it was close to the Mexican border Film Patent trust dissolved in 1915- Broke antitrust laws by doing the followingo No importso Limited lengthso No star actorso All filming and exhibition must pay a license feeo Film supplies and results were price fixed- Claimed they had the right to do it because they had the patent stillo The Pirates Transform Themselves “The Studios” were born- Tried to get risk factors eliminated o Greatest example of vertical integration Brought production, distribution, and exhibition together Bought up everything to minimize risk factors- Why vertically integrate?o Gives you more profit in the end Profits from each and every system along the wayo Don’t have to waste time negotiating or pay transaction costs Early production in the studio systemThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- It’s an issue of financing and return on investmento Studios and studio heads were the ones in charge of making the movies- Believed that people needed to stick to the mold made for youo Had to comply with what studios were wanting- Multiple films per year for multiple yearso Supply side leverage  Bundling, book blocking, and theater chains Theaters were forced to book/buy a block of movies- Couldn’t choose what movies you got- Had to buy crappy movies to get good movies- Couldn’t show movies from other studios when they bought certain bundleso Entered in exclusivity