Technicolor developed a far more widespread use, while widescreen processes and technical improvements, such as CinemaScope, stereo sound, and others, such as 3-D, were invented to retain the dwindling audience and compete with television.

and the Julie Andrews vehicle Star!, each failed attempts to replicate the success of Mary Poppins, Doctor Zhivago and The Sound of Music, put great strain on the studios.

[23][24][25] By the time the Baby Boomer generation started to come of age in the 1960s, "Old Hollywood" was rapidly losing money; the studios were unsure how to react to the much-changed audience demographics.

[26] European films, both arthouse and commercial (especially the Commedia all'italiana, the French New Wave, the Spaghetti Western), and Japanese cinema[27] were making a splash in the United States – the huge market of disaffected youth seemed to find relevance and artistic meaning in movies like Michelangelo Antonioni's Blowup, with its oblique narrative structure and full-frontal female nudity.

[28][29] The desperation felt by studios during this period of economic downturn, and after the losses from expensive movie flops, led to innovation and risk-taking, allowing greater control by younger directors and producers.

[33] This, together with the breakdown of the Hays Code[34] following the Freedman v. Maryland court case in 1965 and the new ratings system in 1968 (reflecting growing market segmentation) set the scene for the New Hollywood.

[36] Produced by and starring Warren Beatty and directed by Arthur Penn, its combination of graphic violence and humor, as well as its theme of glamorous disaffected youth, was a hit with audiences.

"It is a cheap piece of bald-faced slapstick comedy," he wrote, "that treats the hideous depredations of that sleazy, moronic pair as though they were as full of fun and frolic as the jazz-age cut-ups in Thoroughly Modern Millie..." Other notices, including those from Time and Newsweek magazines, were equally dismissive.

Kael also noted the reaction of audiences to the violent climax of the movie, and the potential to empathize with the gang of criminals in terms of their naiveté and innocence reflecting a change in expectations of American cinema.

In the mid-1970s, idiosyncratic, startling original films such as Paper Moon, Dog Day Afternoon, Chinatown, and Taxi Driver, among others, enjoyed enormous critical and commercial success.

Berliner argues that five principles govern the narrative strategies characteristic of Hollywood films of the 1970s: Seventies cinema also dealt with masculine crises featuring flawed male characters, downbeat conclusions and pessimistic subject matters[45][46][47][24][48][49] alongside hard-nosed depictions of a America reeling from tense conflicts like The Vietnam War and President Richard Nixon's Watergate scandal.

[61] Also influential were the works of experimental filmmakers Arthur Lipsett,[62] Stan Brakhage,[2] Bruce Baillie,[63] Jordan Belson,[64][65] John Whitney,[65] Scott Bartlett,[66] Maya Deren and Kenneth Anger[2] with their combinations of music and imagery and each were cited by George Lucas, Francis Ford Coppola and Martin Scorsese as influences.

[67][68] The New Hollywood generation of directors and screenwriters (each educated at either USC, UCLA, NYU and AFI[69]) such as Coppola, Lucas, Scorsese, Steven Spielberg, John Milius and Paul Schrader[70] were sometimes jokingly labeled as "Movie Brats" or "Young Turks".

[71] The end of the production code enabled New Hollywood films to feature anti-establishment political themes, the use of rock music, and sexual freedom deemed "counter-cultural" by the studios.

[72] The youth movement of the 1960s turned anti-heroes like Bonnie and Clyde and Cool Hand Luke into pop-culture idols, and Life magazine called the characters in Easy Rider "part of the fundamental myth central to the counterculture of the late 1960s.

Biskind's book Easy Riders, Raging Bulls argues that the New Hollywood movement marked a significant shift towards independently produced and innovative works by a new wave of directors, but that this shift began to reverse itself when the commercial success of Jaws and Star Wars led to the realization by studios of the importance of blockbusters, advertising and control over production (even though the success of The Godfather was said to be the precursor to the blockbuster phenomenon).

[75][76] Writing in 1968, critic Pauline Kael argued that the importance of The Graduate was in its social significance in relation to a new young audience, and the role of mass media, rather than any artistic aspects.

[84] According to author and film critic Charles Taylor (Opening Wednesday at a Theater or Drive-In Near You), he stated that "the 1970s remain the third — and, to date, last — great period in American movies".

[78] Author A.D. Jameson (I Find Your Lack of Faith Disturbing), on the other hand, claimed that Star Wars was New Hollywood's finest achievement that actually embodied the characteristics of the respected "serious, sophisticated adult films" while questioning the often-told critical narrative of said "last great decade of American cinema".

[86][87] Steven Hyden, writing for Grantland, called the Movie Brats the "cinematic version" of classic rock, to the point of roll calling Spielberg as the Beatles, Scorsese as the Velvet Underground, Coppola as Bob Dylan, Lucas as Pink Floyd, Robert Altman as Neil Young, Brian De Palma as Led Zeppelin, Bogdanovich as the Beach Boys and Hal Ashby as the Kinks.

[49] Los Angeles Times article film critic Manohla Dargis described New Hollywood as the "halcyon age" of 1970s filmmaking, that "was less revolution than business as usual, with rebel hype".

[88] She also pointed out in her New York Times article that the era's enthusiasts insist this was "when American movies grew up (or at least starred underdressed actresses); when directors did what they wanted (or at least were transformed into brands); when creativity ruled (or at least ran gloriously amok, albeit often on the studio's dime).