Table of Contents
THE AWARD OF MERIT
The Academy Awards, also known as the Oscars, is a film award ceremony that highlights films, celebrating the merit and achievements for filmmakers and their films. It's a ceremony that occurs annually and first started as a private dinner ceremony in 1929. Louis B. Mayer, who was sitting president of Metro-Goldwyn-Mayer Studios coined the concept of the Academy of Motion Pictures Arts and Science (AMPAS), as he felt that having a film union would help work through labor disputes that were occurring at the time. Through many organizational meetings, tons of different committees where created, one branch of the committee included the "Award of Merit".
The AMPAS aimed to evolve their organization which pushed them to take the award ceremony for merit films more seriously. The first ceremony in 1929 was a success, which led to the radio broadcasting of the 2nd Academy Awards. This ultimately allowed the 25th Academy Award to become the well renowned televised film award show we know today.
THE BUSINESS OF FILM
As we near a century of existence for the Academy Awards, it's an ideal time to recognize the shifts that have taken place in recent years. What started out as a merit based film reward ceremony, for films that made significant achievements in film or introduced fresh ideas, has vastly changed in meaning and in significance. Although the Oscars give no prize money for nominees or winners, the moment they became a televised show, it instantly became a highly lucrative business. One can imagine the kind of advertising opportunities that come with a show that hosted live coverage of the world's most well known stars and household names.
For film lovers all over the world, this was the opportunity to join an exclusive association and view what they deemed as worthy of the highest accolades for film making. From a business standpoint, this was a win-win situation for AMPAS. They get viewership from around the world, as well as high priced ads. From the filmmaker, studio, and all film company's perspective, this was also a win. Not only will they get the praise from the AMPAS organization for their hard work in front of the world, but studios and film companies would begin to give out bonuses for every nomination and win received. The bonuses were generated by the viewership that would tap into the award show. Your film getting nominated and winning an award guaranteed an increase in domestic and international earnings. As the show's popularity increased so did the earnings of those films and the creditability of the film production companies attached. This realization caused studios and film companies to intentionally make a film with the sole purpose of submitting for an Academy Award in the hopes of advertising for their company. A single Oscar-nominated film can significantly boost a studio’s overall revenue across all its releases.
According to the article,"How Much Is an Oscar Actually Worth?" by Stephen Galloway this is the standard business playbook for all studios and film companies. In fact, calling it the "standard business model" is honestly an understatement – this is the method that drives the film industry. It quickly became apparent that once a film won best picture, they gained the most domestic and international territories for viewership, which lead to hundreds of millions in profit. Being nominated also guaranteed high profits from domestic and international audiences.
From a business perspective, this makes complete sense. Make a film that's worth enough that at it's lowest will be nominated, and at it's best will win an Oscar, all to increase the business' positive future forecasting of profits. Once a film company can increase their worldwide creditability and gain profits on top of that, they can easily make more films. They can also, just as easily, persuade moviegoers to see any film they push out for theaters, whether it's Oscar worthy or not. Winning an Oscar gives everyone involved an advance. Be it stardom, a nice looking resume, or networking– winning this award works for the business of film. If your role is above-the-line then you'll be entitled to backend points, which is the percentage you earn in profits from a film after investors and the distributors have earned their investment (and more) back. This way of business keeps everyone happy, creatives are employed, businesses flourish, and it's a great balance for all sides, everyone has a way to contribute to this business model. It makes sense, to want to earn an Oscar nomination and/or win for the monetary and career value that comes from the AMPAS esteem.
WINNING COMES AT A PRICE
However, there's a certain dilution that happened due to this business mindset taking over an award show that was built to celebrate merit films that creators poured their passions into. Not only has this model peaked in its methodology, but as Galloway's analysis points out: "the post nomination bounce, which usually fuels revenue more than a victory has also faded". Galloway goes into detail about the decreasing monetary bonus provided for nominees and winners. He explains that due to increasing cost of making a film, promoting, and all the technological advances used to create the film, the price of a film vastly outweighs the returning profits.
It's no secret that the cost of films has been driven to unbelievable amounts. Having a $10 million film is now considered a low budget film, and many studios today will say no to a film that's pitched at that value. They would sooner say yes to a film that's pitched at a value of $75 million or more, with $10 million or more going to A-list actors or the director alone. Studios today want a high budget film because it justifies a high profile actor – and if not an actor, then a high profile director, resulting in high profits.
When it comes to films that are made by studios to be pushed for an Oscar campaign, they are made at a slightly lower budget to try and maintain the value the AMPAS uphold for the ceremony's meaning, but the end results are the same. They aim to still have high profile actors and directors for the Oscar run in hopes of making a profit after the win. They negotiate with these high profile creatives and tell them, if they get nominated and/or win for this role, then they will earn more in backend points. The post-award points and bonuses are included into the original contracts that are formed during the development stage of a film. Using The Brutalist as an example, the film was made for approximately $10 million. High profile actors and directors take at least $10 million home as a salary for just one film. In the case of The Brutalist, producers will more likely negotiate with someone like Adrien Brody to collect points on top of the original pay to make up for what can be deemed as a "lower salary" for a high profile creative. According to Deadline, the film went on to gross " $14.5M at the domestic box office, $31.3M worldwide".
The film is now available on HBOMax, meaning it's earned roughly $50 million, after the Oscar wins. The top actors and the director – and potentially a few producers – went home with several extra percentages of that $50 million, after investors and the distributing company got back their investments. Then, the winners of the film will go home with additional bonuses that are earned from that film company after the award ceremony from additional domestic and international viewership. The film is deemed to have made a profit, but according to Galloway, his analysis proves that the Award nominees and winners are earning less and less in bonuses. Within Galloway's article, he reports that bonuses can be as high as $50,000 for a nomination and $100,000 for a win. Galloway quotes Comscore analyst Paul Dergarabedian, highlighting the contrast between these numbers and earnings before the year 2000: "winning best picture could get you past $100 million domestically. That’s not true anymore.”
THE COST OF PROMOTION
On top of the cost of making a film, we have to take into account the cost of promotion. Not only do you have to promote a film to attract the intended demographic that might engage with the film, but you also have to include promotions for Academy members. It is said that a film's marketing budget must be equal, and often times larger than, its overall budget. So, if the film cost $10 million to make, you would need 15 to 20 million dollars just in order to promote the film. This scenario applies largely to normal theatrical releases. There is an additional cost for award promotions.
Award campaigns can cost the same as the typical marketing that is already taking place. The $15 million that one might expect to spend on marketing to people, like academy members, can include all sorts of different things: special screenings, dinners, parties, and other tactics, all in the hopes of ensuring a win. This can easily add up to 100 million dollars when all is said and done. Again, enlisting The Brutalist as an example for this scenario, splitting $50 million among high profile actors, director, and about 50 producers, doesn't seem to leave you with much monetarily. After all, there's still the money that went towards film promotion, award marketing, and the production company that made the film. Once the cost of marketing, distribution, and investors have been considered, there isn't much more to earn. The Oscar win can give you more stardom, but does this stardom lead to more profit? There seems to be more financial cost and not much financial reward for winning an award... So what now?
STREAMING SERVICES ARE NOW LEGIT
More and more streaming services are throwing themselves into the ring for Oscar wins, faithfully taking on the astronomical costs that come with an Oscar campaign. Streaming services have their own business model for how they maintain themselves as a streaming company, which is to retain subscriptions. If they can keep you coming back every month, then they can stay in business. Aiming for nominations and wins at the Oscars carries the same implications for streaming companies as it does studios, ultimately with the same end results: creditability. When developing a film specifically for awards – targeting specific actors, directors, and other above-the-line positions – streaming services will agree to a flat fee for the film. This means there won't be any back end points, or any reported bonuses given for the additional profits that come after an award run. For streaming companies, there's no denying that part of the reward for winning an Oscar is an acknowledgement of merit. As Galloway quotes; ‘this isn’t just about subscribers. It’s about legitimacy: being seen in the same league as Universal or Disney.’
Streaming companies cover the cost of just about everything, taking on the role of investor, production company, and distributor. They are paying for their legitimacy, which is proving to pay off, but the streaming service business model can be seen as a disservice for creatives as they aren't shared in any profits after their flat fee for the making of the film. Even if fame becomes an additional reward for winning, filmmakers would have to stick with the company that produced the film as these companies oversee every part of the process, from funding to distribution. This differs dramatically from films such as The Brutalist or Anora, where more independent connections can be made for more independent profits and films. This independent process creates far more "wiggle room" for which films get made and who gets to star in them, without worry of subscription retention or high profits being the main goal.
"‘This isn’t just about subscribers. It’s about legitimacy: being seen in the same league as Universal or Disney.’ It’s also about hard cash. Netflix saw its stock rise 1.5 percent to $371.49. True the gain faded within hours, but it remained a hugely more valuable company than it had been before."
IS IT WORTH IT?
Are the Oscars actually worth the hassle? Well, best case scenario, Oscar involvement leads to stardom, and the opportunity for never-ending gigs. A slightly less cheery possibility? The perks of winning wears off exactly one year after a film's Oscar fame, when the new winners come along. The stardom and high end gigs are all short lived, a brief, thrilling peak followed by a sharp drop-off. That is, unless you're someone like Emma Stone, with a niche team who aim to be nominated every year. Even with the aim of being included for the Oscars, actors still take on multiple projects at a time – balancing press tours and special screenings for more than one Oscar campaign, all as part of the previous agreed upon salary. This means that development (writing the script, auditions), pre production (rehearsals, read throughs), production (shooting the film), post production (reshoots, edits), press tours (consistent traveling and interviews), and special or FYC screenings (Q&As, travel, PR), are all included in the one salary for any film that's an Oscar hopeful.
On the other end of the spectrum, Jim Carrey is a perfect example of what life looks like when a filmmaker doesn't push solely for an Oscar. He's a household name that had his experience with an Oscar campaigned film, The Truman Show (1998), and he explains that he took a pay cut for the film in hopes the film would win. Fortunately for him The Truman Show was a massive box office hit. Despite taking a pay cut, the film didn't actually receive an Academy Award nomination that year, however, Carrey was reward by how much the world loved and supported the film. Carrey has gone on to star in many of the most iconic comedy films that we all know and love – adults and children alike. His latest film, Sonic the Hedgehog 3, which is the third film in the Sonic franchise, grossed very close to $500 million worldwide, and had a budget of $122 million. The Sonic the Hedgehog franchise has totaled in over $1.3 billion dollars in revenue, with Jim Carrey starring in all of them. This is a prime example of a role that had excellent monetary payouts for Carrey, and showcased his skill as a top actor, without demanding more of him after the role was over.
Having the privilege to be nominated by AMPAS and potentially winning an Academy Award is an incredible honor. Aside from AMPAS being a gratifying reward for filmmakers and their impact, there are hundreds, if not thousands, of roles and job positions that open up for each film project. Due to the creditability that AMPAS has given filmmaking, the film industry has proven to be inclusive of the many skills and talents people can possess. In spite of that, it goes without saying that the film industry today is a very lucrative and costly business, whether it's for the making of the actual film, for an award campaign run, or a normal marketing run. Aspects of the film business take advantage of the spotlight AMPAS has shone on the film industry as a whole, by incentivizing remorseless prices to campaign for a merit film.
A critical part of filmmaking, that appears to be lost among the financial chaos of the business, is the pleasure of creating. Whether a film that deals with the complexity of love (Call Me By Your Name, 2017), a complicated friendship (4 months 3 weeks and 2 days, 2007), or a jewelry store owner with a gambling addiction (Uncut Gems, 2019) – the films, filmmakers, television, and show-runners of today live in a time where visual art is finally appreciated for how it shapes the world. The goal for this visual art form is to reach an audience, to have some sort of an impact on how we see life, and maybe that impact doesn't have to involve an Oscar win... or any awards.
