A motion picture company founded by W W Hodkinson in 1914, as a merger of 11 film rental bureaus. Paramount was the first company that did nationwide distribution, thus gaining a huge efficiency advantage over the old regional States' Rights system. The company did 5-year exclusive contracts with Adolph Zukor's Famous Players, Jesse Lasky's Feature Play and with Bosworth, the contracts were expanded to 25 years later (see Vertical Integration). Paramount also introduced the block-booking system, which meant that an exhibitor who wanted to show a paticular Famous Players movie had to buy an entire package, containing a set of (mostly mediocre) films from all companies that worked together with Paramount. This system was very efficient for the involved production firms and in 1917, Adolph Zukor bought Paramount and merged it with Famous Players.
The new firm was called Paramount Pictures Corporation, and was the dominating force in the American market, it had most of the major stars under contract (like Mary Pickford, Douglas Fairbanks). Adolph Zukor also fired W W Hodkinson, who founded First National to challenge Paramount's power. First National controlled a large portion of the nation's cinemas and thus Paramount decided to build it's own chain of cinemas and achieved yet greater control of the market (in 1920, it controlled 5000 cinemas, 25% of the market). In 1919, First National and Paramount planned to merge, to gain full control of the market and to cut production cost, because they figured that stars couldn't demand huge sums if there was only one major company to work for. But the plan was uncovered by a private eye hired by Charlie Chaplin, Mary Pickford, Douglas Fairbanks and David Griffith, who wanted to know why the major companies didn't prolong their contracts. In reaction to the plan, they decided to found their own distribution company, United Artists, which effectovely ended the efforts to found a monopoly. Nevertheless, Paramount was one of the dominating companies in the Second Oligopoly until the US Supreme Court split the company in two 1949.