"Hollywood is not the big studios anymore," observes Michael Storper, a UCLA professor and expert on the industry's structure. "It's a collection of small and medium-sized firms -- independent producers who come together and actually make films project by project. Very little filming is actually done by the big studios themselves."
For Hollywood producers like Merrifield, and for the industry as a whole, learning to bring together the best possible film and television specialists on a project-by-project basis yields several concrete business benefits.
It means that each job can be staffed with the talent most suited to its demands, rather than with the talent that, at a conventional company, is already on staff and must be adapted to a variety of jobs even if the fit is poor. It means bureaucracy and overhead are minimal, since there is no lasting organization to maintain. And it means that long-term risks and their costs (layoffs, for instance, or other personnel-related problems) are reduced, since there is no long term -- just a team assembled for a finite period and then disbanded.
Taken together, such consequences of the network system are likely to yield higher quality and lower costs. In Hollywood that approach is made possible by the huge concentration of specialists, ensuring that virtually every need can be met by some individual or independent company in the region.
Of course, there are some daunting consequences of this here-today-gone-tomorrow production strategy. For example, like many of the vendors he hires, Merrifield himself is an individual entrepreneur. He works not for Warner Bros. or even directly for the cofinanciers of his current project, New Regency Productions, but for a temporary entity called Free Willy Two Inc., which actually is responsible for making the film. When Free Willy II is finished, Merrifield, like virtually everyone else involved, will be out looking for a new film, television show, or commercial production to work on.
"This is a totally temporary corporation," Merrifield explains as workers touch up the artificial ocean bottom behind him. "After this, everyone goes back to finding another job."
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The Way We Were
How the marketplace made Hollywood do it
In the past year's hype about the so-called information superhighway, most media coverage has concentrated on the marquee names, studio chiefs, and heads of large cable operators and technology and phone companies as if they were the dominant forces shaping the entertainment industry.
And 40 or more years ago, they would have been. Back then seven major studios dominated movie production and controlled distribution in many markets. Films were produced largely in-house by permanent staffs of artists, writers, editors, lighting technicians, and props makers, all ruled by domineering and often-flamboyant studio chieftains.
Up to the 1950s, in fact, there were few better examples of vertically integrated, mass-production industries in the world than filmed entertainment. Far from attracting customers on the basis of product uniqueness, the studios -- like their counterparts in autos or steel -- sold their products by the foot, churning out formulaic cinematic entertainment through the movie houses they exclusively controlled.
All that changed as Hollywood experienced a series of dramatic market changes. The first blow was a major antitrust case in 1948, which forced the studios to loosen their iron grip on the nation's movie houses. Exhibitors were free to demand better and more interesting films from their suppliers -- and they did.
By the 1950s, new competitors emerged to meet that demand. Europeans, in particular, began to offer quality films for worldwide audiences. Some, like François Truffaut and Federico Fellini, would become known as great masters of the medium, but many others simply made standard Hollywood-like films -- such as the "spaghetti westerns" of the 1960s -- using low-budget European locations and crews. Suddenly, the once-semimonopolistic, sedentary film market erupted into a hotbed of competition, driving down the margins for cookie-cutter filmed products.
It was television, however, that struck the final blow. By the late 1950s Americans could view for free an entertainment medium that could rival the basic product coming from the studios. Movie receipts in the country began to plummet. Suddenly, what had been sold by the foot faced a marketplace filled with more and more discriminating customers demanding new and ever-better motion pictures.
Those factors forced Hollywood to "restructure" and "reengineer" itself long before doing so became the rage in other industries. Its main strategy was to specialize: if television and cheap imports had captured the market's low end, the movie industry would create a high-end product that would draw people back to the theaters. Rather than flooding the market with formula movies, Hollywood would offer far fewer movies, but they'd be blockbusters for which exhibitors and moviegoers would pay a premium.
Those shifts required massive changes within the studio system itself. Filmmaking became a craft instead of a commodity, with all contributors -- actors, writers, musicians, public-relations specialists, cinematographers, editors, and financiers -- adding only the highest caliber of skill in order to generate a final product that no one could easily copy. Yet as people became more specialized and capable, they also demanded higher pay. Soon the studios were unable to keep much of their key staff in-house.
As a result, starting in the mid-1960s, Hollywood witnessed an explosion of independent filmmakers, service providers, and other entertainment-related companies. Between 1966 and 1981 the number of independent production companies almost tripled. In 1960, 72% of U.S. films were made by the major studios; by 1990 the studios' share had dropped to a mere 36%.
Today it is independents such as Steven Spielberg, not the studio bosses, who are the true stars in the Hollywood production world. Indeed, even the films "made" under the studio trademark often rely on independent vendors for critical artistic and technical contributions.
