Hollywood and American movies: how the industry works

Hollywood is both a neighborhood of Los Angeles and the shorthand for the American film industry, the most influential in the world. Its reach comes from a particular business model: a few large studios, very expensive films built to travel, and a global distribution network. This guide explains how that system came about, who runs it now, how a movie makes money, and what streaming has changed.

Why the industry ended up in Los Angeles

American filmmaking began on the East Coast, around New York and New Jersey. In the 1910s, producers moved to Southern California for reliable sunshine, varied landscapes within a short drive, cheap land, and distance from the Edison-led patent trust, which tried to control who could make films. Hollywood, annexed by Los Angeles in 1910, became the center of the trade, and the famous hillside sign went up in 1923, originally as an advertisement for a housing development.

The name is now more symbolic than geographic. Disney and Warner Bros. are based in Burbank, Sony in Culver City, and Universal in Universal City. Paramount is the only major studio still physically in Hollywood. Filming has also spread far beyond California, because tax incentives draw productions to Georgia, New Mexico, New York, Canada, and the United Kingdom.

A short history in five stages

• Silent era (1910s–1920s): studios and stars take shape, with Charlie Chaplin and Buster Keaton among the first global celebrities.
• Golden Age (about 1930–1950): sound arrives with The Jazz Singer (1927), and studios control everything, from actors on long exclusive contracts to the theaters that show their films. The Hays Code polices content.
• Breakup (late 1940s–1960s): a 1948 Supreme Court antitrust ruling, United States v. Paramount Pictures, forces studios to sell their theater chains. Television takes away much of the audience.
• New Hollywood (late 1960s–1970s): the ratings system replaces the Hays Code in 1968, and directors such as Francis Ford Coppola and Martin Scorsese make darker, more personal films.
• Blockbuster era (1975 onward): Jaws (1975) and Star Wars (1977) show what a nationwide summer release can earn, and studio priorities shift toward event films, sequels, and franchises.

Who owns the studios

The studios are now divisions of very large media groups. The map changed in October 2026, when Paramount completed its roughly $110 billion acquisition of Warner Bros. Discovery. The combined company is called Skydance, so two of the historic Hollywood names now share one owner.

Blockbusters and franchises

A blockbuster is a film with a very large budget, a global marketing campaign, and a release designed to reach as many people as possible in its first days. Big studio films can cost well over $100 million to make, and promotion can add a comparable sum. A franchise reduces that risk by relying on characters audiences already know: superheroes, sequels, remakes, and adaptations of video games or toys.

The result is a split market. A small number of franchise films take a large share of the money, while mid-budget dramas and comedies have moved largely to streaming. Critics say this narrows what gets made. Studios answer that a few reliable hits pay for everything else.

How a film makes money

The box office measures ticket sales. "Domestic" box office in Hollywood usage covers the United States and Canada together, which surprises many readers. That market brought in roughly $8.6 to $8.9 billion in 2025, depending on the source, still about a fifth to a quarter below the $11.4 billion of 2019.

Theaters keep part of each ticket, so a studio generally needs a film to gross well above its production cost to break even. A common rule of thumb puts that point at about two to two and a half times the budget. After theaters come streaming licenses, television, and merchandise. For the largest releases, more than half of worldwide ticket sales often come from outside North America, which helps explain Hollywood's preference for action, visual effects, and stories that need little cultural translation.

What the movie ratings mean

Age ratings are issued by a board of the Motion Picture Association (MPA), the studios' trade group. The system is voluntary and not run by the government. Theaters enforce it themselves, though nearly all major chains do.

Studios often aim for PG-13, created in 1984, because it allows fairly intense content without losing teenagers. NC-17 is commercially risky, since many theaters and advertisers avoid it. Compared with much of Europe, the American system tends to be stricter about sex and language than about violence.

The Oscars and independent film

The Academy Awards, first presented in 1929, are voted on by members of the Academy of Motion Picture Arts and Sciences, roughly 10,000 film professionals. A win can lift a film's revenue and an artist's fees. ABC holds the broadcast through 2028, and the ceremony moves to YouTube in 2029, a clear sign of how far viewing habits have shifted.

Independent films are financed outside the major studios, usually on smaller budgets. The Sundance Film Festival, long tied to Robert Redford and held in Utah for decades, is their main showcase. It moves to Boulder, Colorado, starting with the January 2027 edition. Festivals like this are where distributors and streamers buy films, and where many directors are first noticed.

What streaming changed

Netflix started producing its own films and series in the 2010s, and the studios responded with their own services, such as Disney+, Paramount+, and HBO Max. Several changes followed:

• Shorter theatrical windows: many films reach streaming within weeks or months instead of the better part of a year.
• Fewer mid-budget theatrical releases: those projects often go straight to a platform.
• Labor conflict: the 2023 strikes by writers and actors were fought largely over streaming pay and the use of artificial intelligence.
• Consolidation: high costs have pushed companies to merge, as the Skydance deal shows.

Our page on American media and entertainment covers the wider shift from cable to streaming.

Soft power and its critics

Hollywood is one of the main ways the United States exports its language, lifestyles, and self-image, alongside American music. Many people's first picture of the country comes from its films, and that picture is often inaccurate, as our list of common misconceptions about the US shows. Other countries have responded with screen quotas or subsidies to protect their own film industries, and China limits the number of foreign films it releases.

Seeing it for yourself

Visitors to Los Angeles can tour working lots at Warner Bros., Universal, Paramount, and Sony, or walk the Hollywood Walk of Fame and see the handprints at the TCL Chinese Theatre. At a US theater, expect around 15 to 20 minutes of ads and trailers before the film. Films are almost never dubbed for American audiences, and foreign films usually play with subtitles at art-house theaters. To plan a trip, see our guide to the largest US cities.

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• American media and entertainment
• American culture
• American music
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