After The Jazz Singer was released in 1927, Warner Brothers gained huge success and was able to acquire their own string of movie theatres, after purchasing Stanley Theatres and First National Productions in 1928; MGM had also owned a string of theaters since forming in 1924, known as Loews Theaters, and the Fox film Corporation owned the Fox Theatre strings as well. Also, RKO, another company that owned theaters, had formed in 1928 from a merger between Keith-Orpheum Theaters and the Radio Corporation of America.
RKO formed in response to the monopoly Western Electric's ERPI had over sound in films as well, and began to use sound in films through their own method known as Photophone. Paramount, who already acquired Balaban and Katz in 1926, would answer to the success of Warner Bros. and RKO, and buy a number of theaters in the late 1920s as well, before making their final purchase in 1929, through acquiring all the individual theaters belonging to the Cooperative Box Office, located in Detroit, and dominate the Detroit theaters. For instance, Cedric Gibbons and Herbert Stothart always worked on MGM films, Alfred Newman worked at Twentieth Century Fox for twenty years, Cecil B. DeMille's films were almost all made at Paramount, director Henry King's films were mostly made for Twentieth-Century Fox, etc.
Movie making was still a business, however, and motion picture companies made money by operating under the studio system. The major studios kept thousands of people on salary—actors, producers, directors, writers, stunt men, crafts-persons, and technicians. And they owned hundreds of theaters in cities and towns across America, theaters that showed their films and that were always in need of fresh material. In 1930, MPDDA President Will Hays also founded the Hays (Production) Code, which followed censorship guidelines and went into effect after government threats of censorship expanded by 1930. However the code was never enforced until 1934, after the new Catholic Church organization The Legion of Decency - appalled by Mae West's very successful sexual appearances in She Done Him Wrong and I'm No Angel threatened a boycott of motion pictures if it did not go into effect, and those that didn't obtain a seal of approval from the Production Code Administration had to pay a $25,000 fine and could not profit in the theaters, as the MPDDA owned every theater in the country through the Big Five studios.
Throughout the early 1930s, risque films and salacious advertising, became widespread in the short period known as Pre-Code Hollywood. MGM dominated the industry and had the top stars in Hollywood, and was also credited for creating the Hollywood star system altogether . MGM stars included at various times "King of Hollywood" Clark Gable, Norma Shearer, Greta Garbo, Joan Crawford, Jean Harlow, Gary Cooper, Mary Pickford, Henry Fonda, Marilyn Monroe, Elizabeth Taylor, Judy Garland, Ava Gardner, James Stewart, Katharine Hepburn, Vivien Leigh, Grace Kelly, Gene Kelly, Gloria Stuart, Fred Astaire, Ginger Rogers, John Wayne, Barbara Stanwyck, John Barrymore, Audrey Hepburn and Buster Keaton. Another great achievement of American cinema during this era came through Walt Disney's animation. In 1937, Disney created the most successful film of its time, Snow White and the Seven Dwarfs.
Many film historians have remarked upon the many great works of cinema that emerged from this period of highly regimented film-making. One reason this was possible is that, with so many movies being made, not every one had to be a big hit. A studio could gamble on a medium-budget feature with a good script and relatively unknown actors: Citizen Kane, directed by Orson Welles and often regarded as the greatest film of all time, fits that description. In other cases, strong-willed directors like Howard Hawks, Alfred Hitchcock and Frank Capra battled the studios in order to achieve their artistic visions. The apogee of the studio system may have been the year 1939, which saw the release of such classics as The Wizard of Oz, Gone with the Wind, Stagecoach, Mr. Smith Goes to Washington, Young Mr. Lincoln, Wuthering Heights, Only Angels Have Wings, Ninotchka, Gunga Din, and The Roaring Twenties. Among the other films from the Golden Age period that are now considered to be classics: Casablanca, The Adventures of Robin Hood, It's a Wonderful Life, It Happened One Night, King Kong, Citizen Kane, Some Like It Hot, All About Eve, The Searchers, Breakfast At Tiffany's, North by Northwest, Dinner at Eight, Rebel Without a Cause, Double Indemnity, Mutiny on the Bounty, City Lights, Red River, The Manchurian Candidate, The Bishop's Wife, Singin' in the Rain, The Great Escape, Goodbye, Mr. Chips, Roman Holiday and Jezebel.