The Keith organization begins converting vaudeville theatres into “nickel” motion picture houses. Their first picture house seats 1,000 people and clears $800 to $1,000 per week. They encourage parents to send their children to these nickel theaters after school is over.
Chicago becomes a center for the motion picture exchanges that supply films for the new Nickelodeons. The Nickelodeons seek to change their programs three to six times a week. Within a year fifteen Chicago exchanges will control 80% of the film rental business in the U.S.
Carl Laemmle, who owns two Chicago Nickelodeons, becomes dissatisfied with the companies supplying him with films. He decides to open his own film exchange, attracting customers by offering good-quality prints, fresh subjects, and “service”. Within three years The Laemmle Film Service would be known as “the largest in the world.”
To show ownership of its films, some exchange companies begin to put their name on the main title of a film.
Edison projectors, selling for $135 each, generate over $182,000 in sales. This is a 131% increase over the previous year’s sales.
The Vitagraph Company of America builds a $25,000 movie studio in Brooklyn.
The shortage of American films opens up tremendous opportunities for foreign producers. Pathè Frères’ productions account for one third of the films shown in the U.S.
Siegmund Lubin, a Polish immigrant who had established a successful film production studio in Philadelphia, assumes ownership of a nickelodeon. He quickly begins building a chain of picture houses that allows him to become the first movie producer to control a film’s production, distribution, and exhibition in a vertically integrated business model.
An Australian film, “The Story of the Kelly Gang”, is over one hour long and becomes the world’s first true “Feature Film”.
Vitagraph releases, “Humorous Phases of a Funny Face”, one of the first animated cartoons.
The Edison Company’s film, “The Paymaster”, filmed by G.W. “Billy” Bitzer (who would eventually film all of D.W. Griffith’s most important movies), sets a new standard for the creative use of available light.