The Hollywood studio system developed as an orgizational response to the introduction and refinement of the full-length feature film. Distinguished by high degrees of specialization and vertical integration, the studio system differed from the old structure and methods of movie production. The increase in running time and the strong emphasis on narrative structure of the feature film strained the capacities of the early film industry to deal with its new aesthetic dimensions at a time of rapid growth. The studio system facilitated the process of creating the technology and generating the necessary skills to meet these challenges.

Under the studio system, the movies, but the actors, directors, writers, and technicians who worked on them were the property of the company whose facilities were being used for making motion pictures. Talent was hired on a contract basis and bound to appear and perform where and when the studio demanded. With a large collection of talent it was fairly easy to cast a film and begin its production. The result of this was the 'golden era' of Hollywood where high-quality and professional films that were being made by anonymous craftsmen featuring manufactured stars. These stars were the main attraction of the industry and were portrayed as the properties of the moguls who headed the studios.

The exploitation inborn in this system inevitably sowed the seeds of its downfall. The US Department of Justice s Antitrust Division filed suit against the major film producers just before World War II, claiming that these companies were using monopolistic business practices. With other factors compiling against the production companies, a new era of legal negotiation began and the Moguls found it difficult to cope with newly independent stars and the gradual critical focus on directors and writers as the heart and soul of the cinema. The result was the decline and fall of Hollywood, which in its final days produced such lavish and seemingly classical studio films. By the 1960s, old Hollywood was dead and a New Hollywood predicated upon young artistic talent and corporate management strategies was prepared to emerge.

Taking the place of the studio system was a new form of industrial workshop in which the film is made utilizing the talents of many different artists. Artisans such as screenwriters, stars, and producers, must be compiled and financial investments must be secured from banks or investors before production can begin. This drastically increases the time required to produce a film when compared to the classic studio system. It also creates a custom film that does not hold to a specific industrial model. Costs have also increased drastically with the loss of the studio system, with prices ranging in the millions. The heart of the movie production still remains even with the loss of the studio system; similar techniques are employed just under different and less efficient methods.