During the Golden Age of Hollywood, five major studios (also known as the Big Five) were the top profiting studios within the film industry. MGM held the top spot for eleven years (1931-1941), with 20th Century Fox firmly in second place. Paramount profited very substantially during the early sound era (1928-1930) and after a slow period during the 1930's climbed back to profitability during the booming 1940's. Warner Brothers and RKO Radio Pictures remained stable until the late 1940's when RKO began to decline.

The Hollywood Studio system created by these five major film studios is credited with developing most of the legendary stars of the Golden Era. During the early years of film production, studios would invest a great deal of money to recruit, groom, and then sign to contracts those stars who possessed the greatest talent potential. This method of self-development came to be known as the "star system."

In 1935 the emergence of the "talent scout system" came into being. This meant that undiscovered talent from outside of the studio had a chance to be discovered by a talent scout who would then represent his client to the studios in the hope of obtaining a contract.

In an effort to find this undiscovered talent, these scouts would constantly monitor Broadway, vaudeville, and radio. On occasion, they would randomly discover a potential star out in the general public based on their style, first impression, or simply good looks. A perfect example of this is Hollywood legend Lana Turner who was discovered drinking a root beer on a bench outside of a diner by a talent scout who thought that she had the perfect look for a part in an upcoming movie.

Performance contracts within the studio system were very strict, and encroached on the social life of an actor or actress. Many allowable social activities were scheduled by the studio as a promotional technique to bring their stars more press and attention. This, in effect, meant that the star was now the property of the studio and that many aspects of their personal lives were under the complete control of the industry.

Most of the star contracts during this period were seven years long, with a six month option for contract players. Should the star prove to not be as popular as the studio had wanted and not generating enough of a profit at the box office within six months, the studio could revoke the contract. However, if they did well, they could be given a higher salary until the option period of their next contract.

These contracts gave the studios complete control over the actors, including the right to make the actor accept any role chosen by the studio whether the actor was interested in the role or not. These contracts also provided the studio the right to loan, and receive a fee or other mutually agreed upon arrangement, their stars to other studios with or without the stars consent.

Due to the restrictive nature and enforcement of these contracts, many stars often found themselves playing roles that they did not want, or were just opposed to. It could be a tough trade-off; and ultimately, in order to be a contract star during this era you had to accept the fact that you, the actor, had no control over your career and were at the mercy of the studio.

The old Hollywood studio system of star control ended soon after the Golden Era. The film studios were eventually forced into shutting down their monopolizing system allowing entertainers and other film professionals, both independent and foreign, more creative and rewarding control over their careers.