By the end of the First World War, the cinema was an established cultural fact in an era of rapid social change. In America, theatres or dream palaces were crucial to the structuring of the film industry. They were the places where cinema came to the masses and the studios successfully exploited such venues as they did the movie stars under contract to them. The first movie palaces were built in 1913. The story of Loew's Corporation in New York is representative. Building on his success and to secure his own suppliers of movies, Marcus Loew bought Metro Pictures in 1919 and went on to buy Goldwyn Pictures, creating Metro-Goldwyn-Meyer (or MGM) – what would become the most powerful studio of the 1930s. The vertical integration of aspects of the industry ensured a corporation like Loew's could control the manufacturing of films, their retailing and their exhibition.

In this period, audience concentration spans would stretch from short one-reel films to features of around seventy-five minutes in direct correlation with their worshipping of stars such as matinée idol John Barrymore, swashbuckler Douglas ‘the Great Lover’ Fairbanks, Rudolph Valentino and a host of beauties including Mary Pickford, Mae Murray, Gloria Swanson, Pola Negri and Greta Garbo. Cinema had begun by borrowing known quality from the theatre. In Germany Max Reinhardt, an acclaimed theatrical producer, had begun working in the cinema around 1910 and demonstrated a phenomenal ability to spot talent that would work in the studio as well as on the stage.

If Hollywood managed to avoid regulation by state institutions through the use of the Hays Office, and the British documentary movement relied on state institutions, it is often suggested that in the totalitarian states of the 1930s – the Soviet Union, Nazi Germany, fascist Italy and the Japanese Empire – the cinema was no more than a crude form of state propaganda. Certainly these were not liberal states and overt opposition was not tolerated, but it would be equally wrong to see the films that were produced in these countries as simply propagandist.

Admittedly Soviet cinema had been state controlled since the revolution but in the 1930s there was a push to increase the number of films produced in the Soviet Union. The man placed in charge of this process was Boris Shumyatsky, who was anything but the stern propagandist. On the contrary, he was a champion of entertainment and opposed Soviet montage on the grounds that it was too difficult and intellectual. He therefore favoured a cinema that spoke more directly to popular competences and dispositions.

This did not mean that Soviet cinema was not subject to censorship and, from 1934, socialist realism was the approved style of filmmaking. However, this style of filmmaking is often caricatured by critics who want to present it as simple propagandist affirmation of Soviet society. It was supposed to present Soviet communism as representing historical progress, and as leading the world towards a socialist Utopia, but it was also associated with the rejection of the objective ‘documentation’ of reality.

The 1950s saw the breaking up of the studio system in the new age of television and a refining of the cinematic experience. Technologies that were pioneered in the 1920s, such as zoom lens and widescreen, found their niche in the cinema of the 1950s. It is not a coincidence that the 1950s is associated with a series of technological innovations in cinema. As television began to take off outside the studios' control, audiences for theatre-based entertainment declined. Hollywood made both bold and sometimes outlandish attempts to bring them back. By the end of the 1950s, widescreen entertainment had become entrenched as a Hollywood staple and film producers and exhibitors were even competing for the best way to pipe smells around an auditorium. In the meantime events like the Paramount decision of 1948 and resistance to having to qualify for the MPAA seal of approval for films with controversial content contributed to the rise of independent producers and directors.

In a decade in which leisure became a market, cinema was only one of a panoply of options for entertainment; driving and camping holidays, and home improvement, for example, provided a veritable democracy of consumption. The emphasis on families spending time together and the rise of the suburbs in the 1950s speaks to a general disinclination to travel downtown to the cinema on a regular basis.

American cinema's domination of world markets coincided with the rise of the Hollywood studios. The Hollywood Studio System would properly take hold by 1930 once five companies – Metro-Goldwyn-Mayer, RKO, Fox (later Twentieth-Century Fox), Warner Bros. and Paramount – had emerged victorious from increasing competition and a scrimmage of mergers and takeovers of production and distribution companies. By 1930 it is estimated that there were around 24,000 cinemas in the US with the five major studios controlling at least 50 per cent of the total industry output. By 1931, D. W. Griffith had made his last film and the film industry was primed to establish the classical Hollywood era with the new technology of sound. In fact, the era from the coming of the sound film to the end of the 1940s is often called Hollywood's ‘Golden Age’. During those years the Hollywood film factory fitted a Fordist model of capitalist mass production. In order to understand the success of the American film industry, it is important to examine the 1920s: the decade in which the studios employing thousands of people changed the face of Los Angeles and in which Thomas Ince's idea of the ‘factory system’ of production took hold.

After over a quarter of a century of declining audiences, the cinema of the 1980s saw not only the stabilisation of audience numbers, but also the creation of new audiences. One of the main reasons for this was the emergence of new forms of film exhibition. The late 1970s and early 1980s saw the emergence of home video as a new form of domestic technology. One use of the video was to time shift the viewing of television programming by taping its transmission and playing it back at another point. It also allowed the distribution of films on video that could be viewed in the home.

The studios initially reacted with horror at the technology, which was viewed as a major threat to cinema exhibition, but it was soon discovered that video reawakened interest in film in general and not only did cinema attendance start to grow once more but, by the mid-1980s, over half the revenue from feature film production came from video. In other words, just as the studios had previously operated the zone-run-clearance system, the contemporary film industry was able to use a video release to prolong the life of a film once it was played out at cinemas and hence it could continue to generate income from it. Indeed, since the mid-1980s, video has become even more important than the cinema financially (although it is being replaced by DVD) so that it is often claimed that cinema exhibition is no longer the key medium for Hollywood but now operates as a means of promoting the film prior to its release in other media.