The Oscar deception.

The numbers behind the industry.
Feb. 21 2006 4:52 PM

The Oscar Deception

Art flicks make beautiful decoys.

The 78th Academy Awards, with its scripted speeches by stars, tearful acceptances, eulogies, red-carpet celebrity fashion show, and gold-dipped statuettes, has the same mission that it did when Louis B. Mayer convinced the other studio moguls to create the event in 1927: "establish the industry in the public's mind as a respectable institution." Now, televised by ABC in dazzling high-definition color, the evening-long informational will further the long-standing myth that Hollywood is in the business of making great—and original—movies.

This illusion, like all successful deceptions, requires misdirecting the audience's attention from reality to a few brilliant aberrations. Take this year's Best Picture nominations: Brokeback Mountain, Capote, Crash, Munich,and Good Night, and Good Luck. What all of these films have in common is that they have virtually nothing to do with the real business of the Hollywood studios. For Hollywood to choose them as a public display of its virtue is almost as absurd as international oil companies presenting awards to avant-garde artists who happen to paint in oil. Just as Exxon, Royal Dutch Shell, and British Petroleum do not make their living from oil paint (which, after all, is typically not made from crude), Hollywood studios do not make money from producing (or distributing) the occasional art or social-commentary movie.

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In fact, the movie business is no longer about making movies. It is about creating properties—including TV programs, cartoons, videos, and games—that can serve as licensing platforms for a multitude of markets. For the first 20 years of the Academy Awards, the movie business was entirely about movies. Two-thirds of Americans went to a movie in an average week, and all the studios' earnings came from the proceeds of the tickets sold at movie houses. But that was "BT," before the advent of television in the late 1940s. Once people could watch sports, game shows, and movies at home for free, most of the habitual audience disappeared. By the late 1970s, U.S. movie theaters, which had sold 4.8 billion tickets in 1948, sold only 1 billion. Hollywood, on the verge of financial ruin, had no choice but reinvent itself.

The studios simply followed their audiences home. To do this, they first repackaged the movies shown at theaters Pied Piper-style by making movies that visually appealed mainly to children and teenagers and then recycled them into home products, including DVDs, TV shows, games, and toys, which, in 2005, produced more than 86 percent of their revenues. In this business model, alas, art, literary, and social-commentary movies are marginalized, since they cannot be either turned into licensing franchises or used to lure huge opening-week audiences to theaters. (Even Steven Spielberg's Munich attracted only a trickle—less than 1 million people—in its opening week compared with the flood—17 million people—for the opening of George Lucas' Star Wars: Episode 3Revenge of the Sith.) And, as satisfying as these art films may be to directors, writers, actors, and producers, they do not lend themselves to sequels, prequels, or other licensable properties. They do, however, perform one function very well: acting as decoys at Hollywood's annual celebration of itself.

Edward Jay Epstein is the author of The Big Picture: The New Logic of Money and Power in Hollywood. (To read the first chapter, click here.)