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The Economics of Oscar

The Economics of Oscar

Articles - Directing

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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