Why an Oscar means big business for Hollywood

Oscar Academy AwardAs filmmakers and Hollywood studios eagerly await the 83rd Annual Academy Awards, IBISWorld has examined whether an Oscar nomination – and win – can bring in the big bucks. Our research shows nominated films can look forward to a serious spike in box office takings, with the coveted Best Picture statuette the most lucrative, as well as the most prestigious, prize.

Nominees are winners too

To reveal the true value of nominations and wins, IBISWorld analysed box office data from the top 150 movies in the US over the four years from 2006 to 2009, finding that the average movie in the US generated receipts of $64.3 million, which is considerably smaller than the $122.1 million for movies with nominations.

In the US, Best Picture nominees earn an average 18.4% of box office revenue upon nomination, and a further 4.5% after the global telecast of the awards ceremony. Further, profit for Best Picture nominees generally exceeds the production budget by more than 200%, as was demonstrated by some of 2010’s Best Picture nominees: The Blind Side (782.6%); Precious (374.0%); District 9 (285.0%); Up in the Air (235.3%); and Avatar (220.9%).

Does Oscar deliver?

The average Best Picture Oscar winner over the last four years saw box office revenue climb an additional 15.3% in the US following its win. And while the Academy Awards is often about big budget Hollywood studios and their bigger budget stars, low-revenue-earning movies can still be nominated – and often win.

Oscars are often won by smaller budget films, which earn a significant monetary boost post-nomination. Runaway success Slumdog Millionaire received the biggest Oscar-related box office gain, earning AU$20.5 million in Australia and AU$55.7 million in the US, after its 2009 nomination and eventual win.

Australian-made cinema is not so golden

Over the last five years, Australian box office revenue has grown at an average rate of 8% and is expected to gross AU$1.3 billion this year. According to Screen Australia however, American films continue to dominate our screens, and Australian films have contributed just 4% of box office ticket sales on average over the past five years. Moreover, the bulk of Australian films produced each year are classified as limited or specialty releases, meaning that they’re released on fewer than 100 screens and very few ever make it into the mainstream cinemas – let alone overseas.

However, 2011 could be a good year for Australian talent with a number of nominees strutting the red carpet on February 27, including Nicole Kidman (Actress in a Leading Role, Rabbit Hole); Jacki Weaver (Actress in a Supporting Role, Animal Kingdom); Geoffrey Rush (Actor in a Supporting Role, The King’s Speech); Kirk Baxter (Film Editing, The Social Network); Ben Snow (Visual Effects, Iron Man 2); and Shaun Tan (Short Film – Animated, The Lost Thing).

Some of the most successful Australian films of recent years have included Happy Feet; Mao’s Last Dancer; Australia; Charlie & Boots; Samson & Delilah; Beneath Hill 60 and Animal Kingdom, but 2011 is unlikely to reach the heights of Australia’s golden year of cinema – 2001 – when Screen Australia reported that feature films grossed A$64.4 million, thanks to the success of Moulin Rouge, Lantana, Crocodile Dundee in Los Angeles, and The Man Who Sued God.

Future of film

Total revenue for the Australian Cinema industry (including proceeds for the box office, food, beverages, screen advertising, video games and other entertainment) is expected to reach $1.90 billion in revenue in 2010-11, up 0.7% from the previous year. Higher attendance numbers, stronger pricing levels and improvements in movie products – such as 3-D films – have driven industry growth, which has averaged 3.8% annually over the past five years.

Looking ahead, however, the surge from the past few years is not expected to be maintained, with industry growth subsiding from recent peaks. Over the five years to 2015-16, total revenue is expected to increase at an average annual real rate of just 0.9% as the industry contends with strong competition from the increasing penetration of digital pay-TV services in the home, increased levels of film piracy, and increased household purchases of home theatre systems.

Robert Bryant is managing director of IBISWorld.

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