In the early 20th century, the major film companies were a handful, included in them was Thomas Edison's own company. Facing increasing competition from European films, and increased competition from independent filmmakers, Edison and a number of other big companies, including Kodak decided to create a trust.
The trust was called the Motion Picture Patents Company, and it was an umbrella that controlled a large number of patents relating to cameras and film techniques. Since Edison controlled many of the major American patents relating to cameras, the MPPC was able to sue independent filmmakers.
The MPPC became such an imposing monopoly on film, that the smaller studios decided to go as far away as possible from the MPCC's location in New Jersey. The location they chose? Hollywood, CA. There they found perfect sunny weather and a court system that made it harder for Edison to sue, both because of distance, and because the judges weren't so keen on imposing patents.