Largely shut out of the American market since the 1920s, foreign films did not really reach US theaters until after World War II. Before the war, foreign films played only in New York and in a few other major cities. After the war, they played in a growing number of art film theaters around the country and created a subindustry known as the art film market, which was devoted to the acquisition, distribution, and exhibition of foreign-language and English-language films produced abroad. Waves of imported feature films from Italy, France, Sweden, Britain, and Japan entered the country, represented by such classics as Roma, città aperta ( Open City , Roberto Rossellini, 1945), Lesvacancesde Monsieur Hulot ( Mr. Hulot's Holiday , Jacques Tati, 1953), Det Sjunde inseglet ( The Seventh Seal , Ingmar Bergman, 1957), Hamlet (Laurence Olivier, 1948), and Rashomon (Akira Kurosawa, 1951). Foreign films paled in significance to Hollywood fare at the box office, but their influence on American film culture was enormous. Foreign films became regular subjects of feature stories and reviews in the New York Times , mass-circulation magazines, high-brow periodicals, and the trade press. They were also promoted by museums, film festivals, and college film and literature departments around the country.

Foreign film distribution was handled originally by small independent companies operating out of New York, such as Joseph Burstyn, Janus Films, and Lopert Films, but by the 1960s the art film market had been taken over by Hollywood. The commercial potential of the art film market became apparent when films like Et Dieu … créa la femme ( And God Created Woman , Roger Vadim, 1956), starring Brigitte Bardot, and Pote tin Kyriaka ( Never On Sunday , Jules Dassin, 1960), starring Melina Mercouri, broke box office records. Since foreign films might have difficulty securing a seal of approval from the Production Code Administration because of their sexual content, the majors got around the problem simply by forming art film distribution subsidiaries. The new subsidiaries either acquired the distribution rights to completed films or formed alliances with new talent by offering young directors production financing. Soon, the majors had absorbed nearly the entire pantheon of European auteurs, including Michelangelo Antonioni (b. 1912), Luchino Visconti (1906–1976), and Federico Fellini (1920–1993) of Italy; Tony Richardson (1928–1991), Joseph Losey (1909–1984), and Karel Reisz (1926–2002) of Britain; François Truffaut (1932–1984), Jean-Luc Godard (b. 1930), Louis Malle (1932–1995), and Eric Rohmer (b. 1920) of France; and Ingmar Bergman (b. 1918) of Sweden.

The core audience for foreign films consisted mostly of America's "cinephile" generation, university students in their twenties and thirties. In response to this student interest, colleges and universities began offering courses in film history, theory, and criticism. Colleges and universities also supported an estimated four thousand film societies, which were attracting 2.5 million persons annually by 1968. Foreign films were a mainstay of these societies, which also showed Hollywood classics, documentaries, and experimental films. To cultivate this audience in the so-called 16 mm nontheatrical market, independent foreign film distributors such as Janus Films and New Yorker Films abandoned regular art film distribution and concentrated on the university scene. They were soon joined by the Hollywood majors, who also wanted a share of the bonanza. Since the art films in distribution had already made names for themselves in the theatrical market and in the national media, companies catering to the 16mm market promoted their rosters mainly through catalogs, which simply described the content of the films and listed the rental terms. This market had existed since the 1930s and had done most of its business renting instructional films to colleges and schools until foreign films came along.

The art film market declined after 1969, as American films with adult themes targeted at the youth market, such as In the Heat of the Night (1967), The Graduate (1967), and Bonnie and Clyde (1967), captured the spotlight. The demise of the Production Code in 1968 and a cultural revolution in the United States ushered in a period of unprecedented frankness in the American cinema that rivaled most anything on the art film circuit. Although university film societies replaced the art film theater during the 1970s, they too declined when home video made huge numbers of old films—foreign and domestic—available for rent. Since 1970, the art film market has functioned as a niche business that depended on foreign-language films and English-language films produced abroad without any US backing. Although the majors reentered the art film market during the 1990s either by forming classics divisions or by acquiring successful independent distributors, such as Miramax and New Line Films, the market continued to generate only a few hits each year.

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