Melody Chen
Professor Noroski
Intermediate Microeconomics
December 19, 2015
The Oligopoly in the American Movie Industry Movies and films have been in our lives since the late 1890s. Over the years, it has transformed from a 3-minute silent film, to a 120 minutes feature movie. From the American classic, The Great Train Robbery, to the infamous Star Wars series. Before the movie starts and the thrilling story begins, we are often greeted by 10-seconds short introductions of the movie studios. The Big Six, Warner Brothers, Paramount, Walt Disney, Columbia, Universal, and 20th Century Fox are the ones we see most often. And it’s these very companies forms a oligopoly market in the movie industry. An oligopoly market structure is in which there are small numbers of firms controlling the market, and the dominance is shared between these firms. The film industry is a good example of oligopoly. The big six as mentioned above, control well over 87 percent of the film industry in the U.S., with other smaller companies and independent studios share the rest of the market inconsiderably. We can say that the film industry is highly concentrated. So with such concentration ratio, how can the movie studio compete with each other? Strategy becomes an important part to the studios. Since the studios are interdependent to others, because the high demands of the market and the competitions, studios must anticipate the likely response of a rival to any given change in their output. In response to this, all the major film companies release new movies every couple of weeks. And because of their reputation, major studios get “royal treatments” in terms of distribution and marketing from movie theaters, and small studios do not. That’s why it’s so hard to see any independent or foreign films in the theaters near you. For movie studios to maximize their profits, they first