Tel T 207 Lecture 14 Outline of Last Lecture I Midterm Outline of Current Lecture II Early Hollywood Sets the Stage for Modern Video Current Lecture Early Hollywood sets the stage for Modern Video o Early video evolved from technology o The technology is key to this market Early power was vested in the inventors and manufacturers o 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 following o No imports o Limited lengths o No star actors o All filming and exhibition must pay a license fee o Film supplies and results were price fixed Claimed they had the right to do it because they had the patent still o 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 way o Don t have to waste time negotiating or pay transaction costs Early production in the studio system It s an issue of financing and return on investment o Studios and studio heads were the ones in charge of making the movies Believed that people needed to stick to the mold made for you These 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 o Had to comply with what studios were wanting Multiple films per year for multiple years o 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 bundles o Entered in exclusivity agreements