In the early 1920s, then, the European film industry was a dismal undertaking. It had experienced a collapse from world leadership to an existence on the margins of the world entertainment industry. The American industry held the largest share of many markets, sometimes above 80 per cent, as was the case in Britain and France. The largest European companies had left film production and focused on distribution and exhibition.

The surprising aspect to this collapse is that it has lasted until the present day. One might wonder why even a single European major film company, comparable to the Hollywood studios, did not emerge. A European film company could have secured access to a large amount of capital, either through banks or the stock market. It could have used this capital to set up a large studio complex in Nice, Madrid or Naples, and fill it with stars, directors, cameramen and other creative and technical inputs, brought away from Hollywood and elsewhere. It could have used its capital to multiply its film budgets and its output of films to a level comparable to Hollywood's. It could have set up its own distribution subsidiaries in every major film market. It could have offered its films in large blocks and on advantageous conditions to cinemas in other countries, underbidding foreign industries. The venture could have made large profits, and European films could have been shown widely in all major markets.