As we saw in the previous chapter, up until 1912, American film companies were largely absorbed in the competition for the domestic market. They were hard put to satisfy the huge demand for films created by the nickelodeon boom. Edison, American Biograph, and other Motion Picture Patents Company members also hoped to limit competition from French, Italian, and other imported films.
Still, it was obvious that a great deal of money was to be made in exporting films. The first American company to open its own distribution offices in Europe was Vitagraph, which had a branch in London in 1906 and soon a second in Paris. By 1909, other American firms were moving into foreign markets as well. This expansion of American distribution abroad continued until the mid-1920s. Initially, most companies sold their films indirectly. Inexperienced with overseas trading, they simply sold the foreign rights to their films to export agents or foreign distribution firms. London became a center for the international circulation of U. S. films. Many British firms profited by acting as the agents for this business, though in doing so they weakened British production by turning over a large share of the U. K. market to American films.
France, Italy, and other producing countries still provided stiff competition around the world. Nonetheless, even before the war began, U. S. films were becoming very popular in some nations. By 1911, for example, an estimated 60 to 70 percent of films imported into Great Britain were American. The United States was also doing well in Germany, Australia, and New Zealand. In most other markets, however, the American share was much smaller. Without the war, Hollywood might not have gained a preeminent global position.
The beginning of the war caused a near cessation of French filmmaking. Many industry personnel were immediately sent to the front. Pathe’s raw-stock factory switched to manufacturing munitions, and studios were converted into barracks. As it became apparent that the fighting would drag on for years, the French industry gradually resumed production, but never on the scale of the prewar era. A less extreme cutback in production affected Italy once it entered the war in 1916.
Hollywood firms seized the opportunity to expand in foreign markets. Cut off from European films, many countries found a new source in the United States. By 1916, American exports had risen dramatically. Over the next few years, American firms sold fewer films through London agents. They began to market their own products directly, opening distribution branches in South America, Australia, the Far East, and European countries not isolated by the hostilities. In this way, American companies collected all the profits themselves and were soon in a strong position in many countries. About 60 percent of Argentina’s imports during 1916, for example, were American films, and in subsequent years South American nations bought more and more Hollywood films. About 95 percent of screenings in Australia and New Zealand consisted of American films. The U. S. shares of even the French and Italian markets were rising.
After the war, the U. S. industry maintained its lead abroad partly because of certain economic factors. A film’s production budget was based on how much it could be expected to earn. Up to the mid-1910s, when most of an American film’s income came from the domestic market, budgets were modest. Once a film could predictably earn more money abroad, its budget could be higher. It could then recover its costs in the United States and be sold cheaply abroad, undercutting local national production. By 1917, Hollywood firms were estimating costs based on both domestic and foreign sales. Accordingly, producers invested in big sets, lavish costumes, and more lighting equipment. Highly paid stars like Mary Pickford and William S. Hart were soon idolized around the world (3.1). By late 1918, Hollywood also had a backlog of films to flood the markets of countries formerly cut off by the war.
Other countries found it hard to compete against Hollywood production values. Low budgets led to low sales, which in turn perpetuated the low budgets. Moreover, it was usually cheaper to buy an American film than to finance a local production. Over time, some countries managed to counter these disadvantages, at least temporarily. Throughout this book, we shall see
3.1 The Elphinstone Picture Palace in Colombo, Ceylon, shows Paramount’s big-budget adaptation of Beau Geste (1926), starring Ronald Colman. Native drivers wait outside for their colonialist employers.
How alternatives to Hollywood cinema have arisen. Basically, however, Hollywood has had two advantages since the mid-1910s: the average production budget has remained higher in Hollywood than anywhere else in the world, and importing an American film is still often cheaper than producing one locally.
World History
