Studios Services From its humble beginnings in the early 20th century, Universal Pictures ultimately joined the ranks of the major Hollywood studios – a journey emblematic of how the Dream Factory has transformed.

Partner Writes

Summary

• – A major implication in television
• – The rebirth of Universal: a daughter of talent agency
• – The pooling of distribution capacities
• – Reformated contents : B-series to blockbusters
• – The integration of Hollywood in the entertainment firms
• – Key Data
• – References

Although the name of Universal studios evokes the Blockbusters of E.T. The Extraterresterial (1982), Back to the Future (1985-1990) and, more recently, King Kong (2005)[+], this studio whose logo reveals world ambitions has long constituted in Hollywood a marginal production-distribution company, which faced many times bankrupcy. In this respect, it only obtained an financial basis with the end of classical studios.

As a consequence, the study of Universal obliges to depart from the traditional conception of the system studio which does not take into consideration the mutations of Hollywood. Its organisations, its audiences, and its means of diffusion and of profitability – in other words, its business model– radically change over time whereas the film sector once autonomous has been integrated to global corporations.

The contemporary period is caracterized by transnational multimedia, economico-cultural synergies and liberalization of audiovisual spheres, openned to domains of culture, tourism and leisure[+].

This new confguration gave marginalised Hollywood entity, such as Universal, the opportunity to initiate shifts in economic, social and cultural practices and uses, which have nowadays become common. This is the reason why Universal proved to be emblematic of Hollywood today. I will observe that its success relies mainly on television development, the rise of talent agents and the pooling of diffusion capacities ; as many facts which have restructured the hollywood sphere.

A major implication in television

Although Carl Laemmle, the founder of Universal, began its carrier as a theater manager, its society Universal, created in 1912, managed to acquire a strong position in production and distribution but not in exhibition. This resulted in its marginalisation during the interwar years. However, after the Paramount decree at the end of the Second World War, this studio was less destabilized  than the Big 5[+].

In addition, Universal invested in TV production since it did not view the latter as a potential competitor but as an unique opportunity. Thanks to films-series, low-cost production and the purchase of Paramount sound pre-1948 film library, Universal was able to address needs of small screen[+]. Its relations with TV channels intensified with the creation of a specific branch: United World Films then Revue Productions. Universal became successful with direct-to-TV films but also with big shows at the image of Stars over Hollywood, Alfred Hitchock Presents and General Electric Theatre.

At the end of 1965, Universal concluded an outstanding production agreement with NBC. It amounted to 200 million dollars, colossal sum for the epoch, which corresponded to 200 Direct-to-TV films[+]. In the 70s, the TV activity of Universal was so predominant that allegedly it was a TV studio instead of a film studio, although it also gained success on big screens. According to Tim Brooks et Earle Marsh, it produced 10 out of the 12 most popular TV network and cable series between 1956 and 1996[+]. Retrospectively, the fusion between NBC and Universal in 2003 formalised close relations that the studio maintained with the channel and the change in production configuration that it implied. Beside the coming of TV, its purchase by the MCA (Music Corporation of America), talent agency, placed it at the centre of the Hollywood game.

The rebirth of Universal: a daughter of talent agency

Universal benefited directly from the rise of agents in the moviemaking business. In deed, at the end of the classical studio system, artists were liberated from long term and rigid contracts with the studios. As a consequence, they needed to manage their carrier by sizing opportunities to become « bankable »[+]. This is the reason why agents gained a central position in the relations among talents, studios and production companies. Since actors, directors as well as screenwriters welcame their services, they have quickly played a key role with a bargaining power facing the studios.

Coming from the music sector, MCA has even imposed practices such as packaging which consists to propose the whole set of talents needed for a movie. So the figures of Lew Wasserman at MCA and later Micheal Ovitz at the helm of CAA (Creative Artists Agency) have come to occupy a powerful role in Hollywood[+]. Might as well say that the progressive purchase of Universal by MCA which began in 1958 and ended in 1962 brought new blood to the studio. In deed, this brought to the studios first-class stars such as Cary Grant, Ronald Reagan, Joan Crawford and Alfred Hitchcock[+].

The pooling of distribution capacities

After the dismantling of the classical studio system, which consisted in a trust of separated and vertically-integrated studios, Hollywood was marked not only by the already-evoked mobility of talents, producers and executives ; but it also structured on a pooling of diffusion capacities. In deed, regular but discontinuous partnerships were concluded among major studios, which shows that old organisational rigidities were cast away. In this respect, the joint venture between Paramount and Universal United International Pictures was illustrative. It took care of the distribution business of the films of both studios then, the ones of Dreamworks and also for some time MGM. Based in London, it had offices in 34 countries and representatives in 23 others, which were headed by 5 regional headquarters in Singapore, Japan, the Netherlands, Brazil and Australia. During the 70s and the 80s, it also managed Pay-TV and home video international operations.

However, its activity has been often questioned since if its members-studios were willing to mutualize structure costs, they cyclically preferred to create their own networks in order to benefit plainly from their successful movies. This is the reason why since 2007 the members of the UIP have wished to invest directly in 15 countries covered by the association. Let’s note that the two major studios detained as well for several years the theatrical entity United Cinemas International, borne out of AMC and CIC – which had theaters in about 20 countries.

Themed parks named Universal Studios have formed another medium by which major studios have diffused together Hollywood narratives. In deed, whereas Disneylands, their competitor, are very focused on the Magic Kingdom[+], Universal used from the beginning many different Hollywood universes coming from different moviemaking companies. The attractions illustrate this heterogeneity of references with Shrek by Dreamworks Animation, Terminator and The Simpsons by 20th Century Fox and Transformers by Paramount/Dreamworks. Universal studios organised first studio tours in 1964. Since that time, 4 parks and resorts have been established in California, Florida, Singapore and Japan, which attracted more than 26 million people every year. Visitors are led through attractions and Hollywood narratives which is supposed to provoke exceptional consumption experiences. In other words, the latter renew the proximity of audiences to Hollywood imagineries. By doing so, they engender new purchasing cycles comparable to the ones generated by films.

Reformated contents : B-series to blockbusters

During the 30s, three minor studios named Universal, Columbia and United Artists[+], were relegated to produce to B-series films. In deed, without theatrical networks, they were submitted to the uncertainty as for the success of their creations and the willingness of theaters managers, which prevented them to get insured incomes and consequently large financial support. They were bound to produce small-budgets movies with second-rank stars and marginal genres. As a result, Universal went successfully in the horror or science fiction genres. Illustratively we could evoke Frankenstein (1931) and Dracula (1931)[+]. In this respect, although aseptised, blockbusters of E.T.The Extraterritorial (1982) and Jaws (1975) belong to the same films styles[+]. Universal studios developed music-hall and humorous productions at the image of the ones about Abbott et Costello[+].

At the end of the Second World War, the theatrical film underwent a crisis, most of which came from direct-to-TV series. Besides, theaters lost its central place in western societies in favor of TV. Meantime moviemakers became culturally disconnected from young publics[+].

After so many setbacks, the sector entered into the era of the « New Hollywood » which welcame a cinema of counter-culture, often engaged and independently produced[+]. However, at the end of the 70s, away from the type of movie, studios led by Universal redefined cinema film with the blockbuster[+]. They launch then successful films with top-notch stars, a « high concept » plot[+] and intense promotional campaigns. Thanks to the aura and the social network of Lew Wasserman, stars were willing to participate in MCA films all the more so as they are often interested in the film box office. As for scenariis, they aimed for consensual and simples formulas. In addition, the launches of films take place with lots of advertisement, promotions and ties-in while they are simultaneously released on hundreds of big screens in the United States and abroad.

The content became a medium for a large chain of value in multimedia and spin-off activities. This strategy was first led by Lew Wasserman with Jaws and E.T. The Extraterritorial. In 1982, the release of the last one was programmed on 500 screens and benefited from a 32-second TV spot on the three U.S. networks. Let’s note that it was the first film to top the 100 million $ mark at the box office in Northern America. In other words, this new cinema searched for differentiation from the small screen by making of the release an event with a buzz and a genre of production focus on young people and families[+].

This type of cinema has inspired the Hollywood milieu for several decades. Often followed by many multimedia sequels, these films elaborate global commercial narratives and imageries which are named franchises[+]. The latter generate secure income through the unlimited spin-off activities: films, vidéos, derivéd activities, parks, leisures, licenses for general goods. Although this model is running out of steam with the over-abundance of communication, the enormous slate of new releases and the inflation of budgets, the beginning of every summer remains marked by blockbusters of this kind. These engender value beyond audiovisual spheres, which entertainment firms want to capture.

The integration of Hollywood in the entertainment firms

Universal is emblematic of this multidimensional exploitation of audiovisual contents by synergies through the entertainment sector. As soon as the introduction of sound in film, music holds synergetic relations with the sector. In this respect, Universal was successively acquired by Decca Records then the Music Corporation of America. The first company was created in 1929 in Great Britain by Ed Lewis and Jack Kapp. It concentrated on the stars such as Guy Lombardo, Bing Crosby, the Andrews Sisters, Duke Ellington, the Mills Brothers and Louis Armstrong. It had developed a lot of cooperations with Universal between 1938 and 1948. So when it considered buying a studio, it turned naturally to the latter[+]. It wanted to benefit from its presence in Holllywood to optimize its assets in the audiovisual sector. The second company was MCA which became predominant as a talent agency for music. According to some estimate, it managed in the thirties two-thirds of famous music bands[+]. Its goal was to take advantage of the studio to invest in the movie sector. It remains crucial to underline how Lew Wasserman inspired synergies which are common nowadays among large conglomerates such as News Corporation and Time-Warner. In fact, if Walt Disney discovered them empirically and intuitively, the boss of Universal adopted a strategy to develop and make them grow through cross-promotional campaigns, the development of intricated goods and symbolics chains.

In addition, Hollywood studios except Disney have progressively been acquired by overarching companies. Nevertheless, reasons have evolved : while prestige rationale and contracyclical diversification explained erstwhile these investments in Hollywood, the latter endeavor nowadays integrative logics of studios in larger entertainment corporations. Illustratively Columbia was once possessed by Coke Cola whereas Gulf+Western, a company of wide activities detained Paramount for some years. With these purchases, firms wanted to diversify and consider show business as an autonomous and contracyclical activity. To the contrary, last acquisitions used movie contents for vast activities away from the audiovisual sector. One can mention the purchase of Columbia by Sony, Universal by Matsushita then by NBC-General Electric and Comcast, but also the 20th-Century Fox by an Australian press magnate, Rupert Murdoch. They all wish to impact the center of world cinema where technological changes are decided and where creative evolutions are triggered[+]. In these configurations, cinema does not form anymore the only creation and source of value, but to the contrary it is intricated in firmal logics and products and services chains which overarch them largely. They are marked by the domination of television, multimedia diffusions, generalised sequels, themed parks and spin-off activities.

Universal 100th

In conclusion, Hollywood evolutions which Universal remains the emblematic studio show the flexibility and dynamic of the Hollywood milieu. Contrary to the static image which often dominates in academic studies, it stays marked by power balance which are struck in a plurality of domains : production, diffusion but also multimedia sector, and more largely leisures. Studios power always results from their ability to create and diffuse their creation but also paradigmatic transformations which redefine the film industry.