Christians have been making films almost from the beginning of filmmaking. There's a retrospective on Christian involvement in the cinema at christianheadlines.com which contains a good deal of information that I hadn't seen before.
"At the end of the 1930s two Christians set out to make movies that would honor Christ and ended up using radically different methods.
"Illinois businessman Charles Octavia Baptista produced his first film in 1939, (and)... in 1942 Baptista formed the Scriptures Visualized Institute, later renamed the Baptista Film Mission. Baptista refused to hire non-Christians to work on his productions and may have based this business practice on II Cor. 6:14."
"After trying to film a movie in Ohio in 1938, Episcopal priest James Frederick left for California hoping to use Hollywood technicians and actors to make Christian films. In 1941 Frederick's company Cathedral Pictures produced and 20th Century Fox distributed The Great Commandment to movie theaters across the United States. Frederick believed in using the best acting talent available and hired non-Christians to work in numerous roles."
Isn't it interesting that the same arguments, controversies and disagreements about methodologies have been with us since the beginning? So, both the attempts to form an independent Christian film industry and the attempts to work within the Hollywood system have been at work starting in the 1930s. Anyday now one of them should show itself the "best" way...
A History of Christian Films