The Economics of Oscar

We all know that an Oscar win means box-office "bounce." Ever wonder how high?

Randy Nelson with Doug Atchison | Published July 1, 2003

2003 was a great year for proving the validity of “Oscar bounce.” Chicago While three of the Best Picture nominees (Chicago, The Pianist and The Hours) were playing on relatively few screens in the final Oscar qualifying week of December 27th, the other two nominees (Gangs of New York and Lord of the Rings: The Two Towers) had already been released wide the previous week. As could be predicted, while the latter two did not see any dramatic rise in box office income after the Oscar nominations were announced, the first three certainly benefited. The Pianist In the week after The Pianist garnered nominations for Best Picture, Director and Actor, the film appeared on nearly twice as many screens and took in about 53 percent more money than it had the week before, according to Nielsen EDI and Variety.com. And after actor Adrien Brody and director Roman Polanski each won their major awards, the movie had its most profitable week—taking in $3.3 million and averaging $4,314 per screen. Chicago, already a hit by the time Oscar nominations were announced, nearly doubled its box office revenue between the nominations and the week of the show, making over $59 million in those five weeks. Gangs of New York Chicago and The Hours each earned about 44 percent of their total domestic box office revenue in the five weeks between the announcement of nominations and the Oscar show, according to EDI's approximate box office numbers. The Pianist made $11.1 million of its $32.5 million in those five weeks, or about 34 percent of its total domestic business. Films like Gangs of New York and Lord of the Rings: The Two Towers, which had been released to wide audiences well before the other three Best Picture nominees, didn't bounce nearly as high. Gangs, which made about $77 million in its entire run, had made more than $69 million before it was nominated for Best Picture, Actor and Director. It was released on 1,504 screens in its first week, according to Nielsen EDI statistics. Compare that to The Pianist, which opened just a week later on only six. Likewise, Lord of the Rings appeared on 3,622 screens in its opening week. It made a mere five percent (or $16.7 million) of its total haul between garnering a Best Picture nomination and losing out to Chicago. On the other hand, its total gross of about $338.8 million ain't too shabby. -Jason Mann Box office figures courtesy of Nielsen EDI and Variety.com (5/29/2003).

If those glitzy year-end Oscar ad campaigns seem extravagant, studio execs aren't making any apologies. “When Oscar talks, the box office listens,” is their mantra. But what effect does a nomination or award actually have on a movie's performance? Industry analysts estimate that an Academy Award for Best Picture will boost a film's box office revenue by $20 to $40 million dollars. An award for Best Actor or Actress is thought to bring in an additional $4 to $5 million. In most cases, though, these estimates simply measure post-Oscar revenues, ignoring the fact that a film would have taken in a portion of these earnings even if it wasn't recognized by the Academy.

Several colleagues and I at Colby College* decided to apply real economic principles to the matter of post-Oscar “bounce.” For a paper published in the January, 2000, issue of Economic Inquiry, we developed a statistical model to measure the incremental box office revenues that an Oscar nomination or award provides.

To do this we compared box office data for every film nominated for Best Picture, Actor/Actress and Supporting Actor/ Actress from 1978 to 1987 with data for 131 “non-nominated” movies released in the same weeks as the lauded films. We then determined an Oscar nomination or award can affect a film's domestic box office in one of three ways: 1) by extending the number of weeks the film remains in theaters, 2) by increasing the number of screens on which the film appears or 3) by increasing the average revenue per screen.

First, by using “survival curves”—a technique developed to determine how long sick patients survive under different medical treatments—we determined the impact of an Oscar nomination on a film's theatrical longevity. Not surprisingly, a nod from the Academy means increased life expectancy at the box office. On average, 76.1 percent of all nominated films remain in theaters or are rereleased following the nominations, compared to only 22.3 percent of non-nominated films. After the Awards ceremony itself, the prognosis for overlooked films becomes even grimmer. A mere 6.2 percent of non-nominated films are still breathing, while more than half of all nominated movies survive. The average nominated film remains among the top 50 grossing films for 24 weeks, while all others stay in contention only 11.1 weeks. So an Oscar nod not only gives a movie prestige, but can add months to its lifespan.

An Oscar can also add real estate. On average, a nomination for Best Picture increases the number of screens on which a film appears by 41.16 percent. But a nomination for Best Actor/Actress increases the venues by a whopping 84.95 percent. And for the lucky winners, the number of screens shoots up 122.32 percent for Picture and 200.76 percent for Actor/Actress. So Oscar is a friend of theater-owners as well. Unless, however, a movie only receives a nomination for Supporting Actor/Actress, which only commands a paltry 4.76 percent increase in the number of screens. Should a movie actually win one of these awards, however, screen space shoots up by a respectable 23.99 percent. So, it would seem that Martin Landau's turn as Bela Lugosi (and his corresponding win for Best Supporting Actor) was probably the best thing that ever happened to the underappreciated Ed Wood.

But what about the bottom line? Sure a studio can keep an Oscar-nominated movie in the theater longer and on more screens, but how much more money does the film actually make? First, we discovered that the financial impact of a nomination alone ends with the awards ceremony. Films that fail to win anything on Oscar night reap no additional benefits from a nomination. However, an Oscar win has an economic effect on a movie for an average of four weeks beyond the ceremony.

But what kind of an effect? By taking the results of our first two equations for theatrical longevity and number of movie screens and combining them with the average revenue per screen, we were able to derive estimates of the incremental revenues that a nomination or award generates. Our results indicate that on average a nomination for Supporting Actor or Actress is worth $147,131; a nomination for Lead Actor or Actress, $476,617; and for Best Picture, $4,799,118. Respectively, an actual Oscar win in each of the corresponding categories would add an additional $1,612,939, $4,035,023 and $12,690,035 to the films' total box office. Remember, too, that these numbers are for pictures made up to 1987 (for which data was available)—before Miramax redefined the art of Oscar advertising. So the numbers are potentially significantly higher now.

And if you are ever irritated by the glut of quality films that are released around Christmas and wonder why the studios couldn't have sprinkled some of these gems through the barren months of spring and summer, statistics indicate Hollywood knows what it's doing. For example, a Best Picture nomination for a film released in the first quarter of the year is worth an additional $673,082, while the same filmed released in the fourth quarter would add an additional $7,830,000. The corresponding estimates for a Best Picture award are $2,737,124 and $16,030,730, respectively.

So next time you roll your eyes at what seems to be an over-the-top push to flaunt a prestige picture to members of the Academy, remember what the hard numbers reflect: Oscar means money. And that's probably a good thing. Otherwise, there might be no incentive for Hollywood to crank out anything but recycled sequels and bad adaptations of comic books.  MM

*Mike Donihue, Don Waldman and Cal Wheaton.

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COMMENTS | POST A COMMENT

Comment by jane reminder on 7/16/09 at 5:48 am

“Slumdog Millionaire,” has seen a big boost at the box office since the film’s Oscar nominations.Danny Boyle’s film, which won eight Academy Awards a week ago, has now taken $115m (£81m) in the US, and is approaching the $200m (£140m) mark at the global box office.

Comment by Personal Blog on 6/02/10 at 12:18 pm

The Oscar Awards never seize to recognize movies that are worth our time and money.

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The Oscar Awards never seize to recognize movies that are worth our time and money.

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Comment by Curso Ingles on 6/26/10 at 5:58 pm

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Comment by Fethiye on 7/08/10 at 3:37 pm

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The Oscar Awards never seize to recognize movies that are worth our time and money.

Comment by Dorris on 8/13/10 at 10:25 pm

Awards can really boost a movie hat is being shone. Like if it won different prizes or trophies, more viewers would be more curious about the movie.

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