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This Month in Business History: ‘The Wizard of Oz’ and America’s Film Industry

August 17, 2021 • History Factory

A gust of wind whips through a small farm in Kansas; dust stirs in its wake. A powerful storm is brewing, and a young woman takes shelter in her family home, her little dog yapping in her arms. Through the window, she sees wreckage swirling all around — or maybe she’s the one swirling? With a start, she realizes that she’s been sucked into the cyclone, spinning faster, faster, faster, familiar objects and people whizzing by her window. Then everything comes crashing down.

She knows one thing for sure: She’s not in Kansas anymore.

“The Wizard of Oz” hit the silver screen on August 12, 1939. Featuring a young Judy Garland and one of the first uses of Technicolor in film, it was an instant hit. Mervyn LeRoy, who directed the film, got his start in the silent film industry; he made the transition to movies with sound just 10 years prior to making the enduring classic. This moment was the height of Hollywood’s so-called Golden Age, when five major film companies controlled the industry — Metro-Goldwyn-Mayer (MGM), Paramount Pictures, RKO, 20th Century Fox and Warner Brothers. New advances in audio and visual technology had made movies bigger and better, putting them in the center of American life.

The Golden Age produced a number of beloved films, including “It’s a Wonderful Life” and “Casablanca,” and ushered in techniques still used by filmmakers today. MGM was among the forerunners of these changes in entertainment and also launched many noted Golden Age actors. The studio is often credited with creating Hollywood’s “star system,” the method of tightly managing performers of that period. Actors would sign with a studio, agree to produce movies only with that studio, and then be introduced to the public, often with a new, studio-created name and image. The practice left stars without many choices or control, leaving many vulnerable to exploitation. Garland, for example, alleged that she had been a victim of sexual misconduct and was forced to take drugs to give her the energy required to perform. Labor laws eventually would broaden choices for performers, but the studios’ treatment of its stars wasn’t the only pressing issue of the era.

In the midst of America’s Great Depression, moviegoers sought out the silver screen as an escape from a dreary, difficult world. Consumers leaned into biting comedy such as “Animal Crackers” and “Duck Soup” and also the grim truths of the era, packing theaters for films featuring heightened social realism. Roles as rogues and thugs turned actors such as James Cagney and Edward G. Robinson into overnight sensations.

As the economic crisis raged, theater attendance remained high, with 60 million to 80 million attendees each week. By 1933, however, even movie studios would feel the Depression’s effect, after many incurred massive debts. Attendance began to fall as unemployment rates skyrocketed. But in a few short years, the film industry had all but recovered. Hollywood’s output shifted to include the sweet wholesomeness of “Snow White and the Seven Dwarves” (1937), the dreamy costumes and landscapes of “Gone With the Wind” (1939), and the dazzling Emerald City of Oz.

Of course, nothing lasts forever. At the time, it was common for studios to control the production of films and also to own the theaters that distributed them. In the late 1960s, the U.S. Supreme Court ruled that this was a violation of antitrust laws. The sun set on Hollywood’s Golden Age as the U.S. government broke up the Big Five’s hold on the industry and the increasing popularity of television led to a shift in the way people found entertainment. Later, after the turn of the 21st century, streaming services and social media gave consumers more entertainment choices than ever, but movies’ popularity continued to endure.

As with the Great Depression in the 1930s, the COVID-19 pandemic brought widespread challenges. This time, however, the film industry was sucked into the cyclone along with everything else in early 2020. With the virus shuttering public entertainment, everyone who makes movies was sidelined indefinitely, and cobwebs gathered in the corners of every theater. During a trying time when people needed entertainment escapes, movies were suddenly harder to come by. Instead of visiting theaters, fans found themselves streaming new releases at home on platforms such as Disney+ (“Jungle Cruise”) or HBO Max (“Space Jam: A New Legacy”) and watching reruns of old favorites. It isn’t strange these days to see the producers of popular films taking greater control of their distribution … which might sound a little familiar.

As in Hollywood’s Golden Age, most of today’s blockbusters are made by fewer and fewer studios. In fact, MGM, the masterminds behind “The Wizard of Oz,” was sold to Amazon for $8.45 billion in May 2021, meaning a lot more of that studio’s content may start showing up in Amazon Prime Video accounts. The recent boom in vertical integration between content makers and producers may signal yet another new era for the movie industry.

Despite continuous shifts in the way we consume entertainment — however often the landscape swirls and we discover we’re not in Kansas anymore — one fact remains: People still love movies. This month, we’re celebrating an industry that continues to evolve and produce the content we treasure, especially the iconic “The Wizard of Oz,” which turns 82 years old this month.


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