I wanted to end this Oscar season — and kick off the summer box office — writing a little bit about a topic that’s become a bit of an obsession of mine, how the Oscars play into it, and what it means for The Movies. Down below, we’ll hit your questions, talk the telecast, finish on a few final thoughts, and wrap up the year! - Walt
Earlier this year I was doing a talk at Neuehouse with the author Jeff Yang about our books, when someone asked a question about the then-upcoming Oscars. I’m paraphrasing, but the question was effectively why should we still care about these things? Jeff’s book, The Golden Screen: The Movies That Made Asian America, came out the year after Michelle Yeoh became the first Asian person to win Best Actress.
But that long wait provokes some obvious questions about what is the point of an award show that I think most concede is inconsistent at identifying the best performances and films. I don’t need to recap this debate, as everyone who cares about — or conversely, doesn’t — has had it at one point or another.
My answer to this question sidestepped the important questions of how we measure and rate quality, why we give awards, what the point of this all is. I drew instead on the economic: the existing incentives are such that every marginal dollar in Hollywood ought to be invested in sequels, reboots, and established players. Oscar potential is one of the sole remaining arguments to make film without an obvious commercial angle.
The Oscars matter because almost every other incentive to fund provocative, original, and innovative work has dried up. It’s the last argument against risk aversion we’ve got. You don’t have to like ‘em, and you certainly don’t have to agree with ‘em, but they’re an oasis of motivation in an increasingly mercenary industry and we should be grateful they exist. I’m going to draw on reporting from my book, You Are What You Watch, to make this argument. Let’s dive in.
Risk Aversion
There is a perception that Hollywood is obsessed with making money above all else. This is only partially true. The only thing that Hollywood values more than making money is not losing money. Nobody ever lost their job by greenlighting safe, reliable franchise films that doubled their budget and made a slight if reliable profit for the studio. Lots and lots of people have lost their jobs by greenlighting something weird that bombed. It’s a system that incentivizes an aversion to risk.
The data here is all pre-pandemic, and there have been some shifts (see: video games), but here’s the rate at which films reached certain thresholds of box office revenue given their budgets, and based on whether the films are new properties, sequels, or based on pre-existing work.
You can see it right there: 46 percent of films without a pre-existing franchise hook made their budget back domestically, compared to 66 percent of sequels. That figure reached 77 percent for spin-offs and 58 percent of remakes.
If you’re greenlighting movies, that math is pretty hard to argue with.
Every dollar you spend on an original concept is a riskier wager than every dollar you spend on a sequel or a reboot. This is a business, and Wall Street likes businesses where one dollar goes in, and one dollar and twenty five cents comes out. They don’t care for businesses where a dollar goes in, and the number that comes out is maybe 25 cents, sixty cents, eight dollars, one dollar, or ten cents.
As a result, the incentive structure in Hollywood has made it so that it’s financially difficult to get movies that are slight risks made.
What that’s done
Just take a look at the major releases for upcoming summer, which is supposed to kick off this weekend with The Fall Guy.
Originals: Back to Black (May 17), IF (May 17), Horizon: An American Saga (Part 1, June 18, Part 2, August 16), The Bikeriders (June 21), Borderlands (August 9), Trap (August 9)
Sequels, Reboots, or Franchises: Kingdom of the Planet of the Apes (May 10), The Strangers: Chapter 1 (May 17), Furiosa: A Mad Max Saga (May 24), The Garfield Movie (May 24), Bad Boys: Ride or Die (June 7), Inside Out 2 (June 14), A Quiet Place: Day One (June 28), Despicable Me 4 (July 3), Beverly Hills Cop: Axel F (July 3), Maxxxine (July 5), Twisters (July 19), Deadpool & Wolverine (July 26), Alien: Romulus (August 16), The Crow (August 23), Beetlejuice Beetlejuice (September 6), Transformers One (September 20).
That’s not a lot of new ideas! I’m sure a lot of these movies are going to be really good. I, for one, am actually pretty bullish on this summer. But in terms of new visions, in terms of new ideas, what are we working with here?
Compare it to the summer of 2004, which had originals like The Day After Tomorrow, I, Robot, Troy, Van Helsing, Dodgeball: A True Underdog Story, The Village, Collateral, Anchorman: The Legend of Ron Burgundy, The Notebook, Napoleon Dynamite and The Terminal.
Or, if you really want to feel it, the summer of 1994, which had The Lion King, Forrest Gump, True Lies, The Flintstones, Clear and Present Danger, Speed, The Mask, Angels in the Outfield, and Natural Born Killers.
And this year, what even are those originals? A video game adaptation, an Amy Winehouse biopic, a John Krasinski-Ryan Reynolds movie, M. Night Shyamalan back again, all established brands. Two of those are projects by Kevin Costner, who self-financed it. Hell, Francis Ford Coppola spent an entire winery making Megalopolis, and nobody’s interested.
The point here is, these incentives to not lose money above all else have had real ramifications. In the commercially driven summer box office, there are not a whole lot of risks being taken, there’s not a whole lot of new blood being featured, and there’s not a whole lot of experiments being done, at least not on Hollywood’s dime.
The wildest, most original gambles are self-financed, because an auteur wanted to make a risky work and the only way to make that happen was by coughing up the change themselves.
Which brings us back to the Oscars.
What the Oscars are for
Going back to the question at hand, why should we still care about these things?
Well, the good news is that there is still a motivation for the moneymen to invest in speculative, challenging work, and that is because of the Oscars. It might be your lifetime ambition to win an Oscar, it might mean as little as a paperweight to you, but the Oscars are still a highly desirable industry award for the executives who control the money in Hollywood.
Even as the audience for the Oscars has slipped, even as their relevance has been debated, even as the composition of their voters has been scrutinized extensively, people who control the purse strings still really, really want this thing. People who work in movies, in front of the camera or behind it, still really want these things. Every Oscar night you see a little bit of that magic, from the speechlessness of Emma Stone when she won for Poor Things, or the triumph of Cord Jefferson when he won for American Fiction, or Christopher Nolan finally getting up there after decades for Oppenheimer.
Does Nolan get $100 million to make a movie about physics if the Oscars don’t exist? Does American Fiction get the room it needs to breathe as an auteur-driven film if its only possible measure of success is box office? Does Poor Things get a $35 million budget if not for the Oscars track record of Yorgos Lanthimos and Emma Stone? I think the answers are no. I think they’d find a way to exist, perhaps, but not at the level of creative control, and not at those budgets.
That’s what the Oscars are for. The distance between Wall Street and Hollywood has shrunk, industrial consolidation has meant that inconsistent returns are no longer viable. The Street wants a consistent ROI more than it wants a blockbuster quarter, and the industry is prepared to give it to them.
Risk aversion is dangerous. The risk of running out of new ideas, the risk of failing to lay the groundwork for the franchises of the future are real. This isn’t to say that all the risk-takers are gone — smaller studios like Neon and A24 have punched above their weight at the Oscars by having a stronger stomach for risk, and institutions like the Black List and the Nicholls Fellowship continue to give original scripts a boost in a risk-averse town — just that to understand why the industry is as it is, risk-aversion is the key thing.
And that the Oscars — stodgy they may be, flawed they may be, inconsistent they may be — are one of the rare institutions actually incentivizing risk-taking, and for that we’re all better off.
Now, on to the Q&A:
How did you think you did?
Walt: Six-for-six ain’t bad. It wasn’t the most troubling year, shout out to folks like James England who also got the clean win, but obviously there were a few sticky categories and I’m very pleased we were right in, for instance, Best Actress. The model is going to slowly improve, and I feel pretty good about where we’re at right now.
Any highlights? Any worries?
Walt: I enjoyed the telecast, and it appears the Academy agrees with me, as their internal survey had 84 percent give a positive rating to the broadcast. Things are back on track there.
I do have one fear, and that’s that I think the short films categories are becoming a problem, with big stars bigfooting in, dabbling in shorts, and getting an Oscar on name recognition alone. It’s happened before, but this year in particular was rough. The short films are best when they recognize new and emerging talent in my view. This year, Wes Anderson won in best short and John Lennon’s kid won in Best Animated Short. Last year, JJ Abrams and Idris Elba’s short won in Animated, then the year before Riz Ahmed won for The Long Goodbye. All of these are worthy films, but the practice of big-name stars muscling into short films certainly seems to have picked up since Kobe Bryant won for Dear Basketball, and it’s getting kind of tough to avoid the perception that these stars are essentially smurfing in an easier category.
I am curious if the decision to split the Short Films and Feature Animation branch in twain will solve this. For instance, if the feature animation people were voting on name recognition in the shorts categories, and getting in contenders that otherwise would not have been recognized by their peers, splitting the branches should solve that.
Twas exciting to see snippets of what the best stunt and crew/effects could look like when Gosling/Blunt were on stage. When will it happen? What will it be called (Best Stunt crew)? When it does happen will Tom Cruise still be able to pull one off last leap of faith stunt to be eligible during that initial year?- Rahat
It’s gonna happen, I’m convinced. It’ll be called Best Stunt Coordination, go to the head of department, and now that stunts have a branch I bet we have it before the 100th Academy Awards in 2028. If Tom can pull off a stunt the same year he’s eligible for half-price blue plate special for seniors, go for it.
Incidentally, if the Academy continues its practice of having Best Picture presented by representatives of the winning film of 50 years ago, that ceremony’s top prize will be handed out by… Woody Allen! So maybe a bunch of stunt guys doling it out instead would be preferable.
Hey, what about that finances post you teased?
Didn’t get around to writing it, and also thought a little better of it because I’m not quite sure how much broader market trends in the year the Academy was investing had more to do with some of the troublesome numbers than anything else. Basically, here’s the chart that spooked me a bit:
In general, the Academy wants that Investments number going up consistently over the remaining term of the ABC contract. The Academy awards are a money machine, essentially generating $86 million-ish in profit for the Academy, which ideally they would sock away into their investment portfolio as a big moat against lower rights deals in the future:
Now, the problem is, they have this museum and the museum is not really generating the profits they want, and is in fact seriously eating into the profits of the Academy Awards. You can see this by zooming out from the Academy Awards revenue and looking at the overall Academy’s balance sheet, factoring in things like the museum:
That’s a tough 2023! The museum is hitting them, which is OK, as long as it pays off long-term, which I generally think it will.
But, and here’s the reason I didn’t want to get too alarmed, is the investment portfolio also wasn’t really delivering. See, the Academy’s fiscal year ended June 30, 2023, which meant that the performance of their assets covers August 2022 to June 2023. The nominal total return for the S&P 500 over that period was 6 percent, and the Academy had to dip into their reserves to cover museum costs. That’s a tough market!
Now, the reason I’m not worried is I bet the Academy’s balance sheet is humming right now. From August 2023 to the end of April 2024, the nominal total return of just the S&P 500 is at about 16%. In that event, if the Academy’s investment managers managed to meet or beat the benchmark, they would add $110 million to their $690 million investment portfolio, not even counting March’s Academy Awards revenue.
That’s what I’ve been talking about when it comes to the Academy transitioning toward something similar to a university; I bet they make more money off their endowment this fiscal year than they do off the freaking Oscars.
My question is about the lasting impact of the strikes. Are we just going to have fewer quality films released in 2024 (and a terrible awards season), or are Indies going to make up the difference with cheaper/faster/quirkier films? - David Sparks
Walt: I think we’ll be okay. I think the biggest impediment was to the big, schedule-busting movies, the ones that take months of shooting and had to be rescheduled or delayed. For the kinds of movies that can really hit at the Oscars, it’s less of a scheduling fiasco. It was snubbed, but May December feels instructive here. That movie was shot over the course of 23 days in Savannah, which was necessary because that’s the window in which they had Natalie Portman, Julianne Moore, and the location locked down. I heard they were originally going to shoot it in Maine, but the end-of-school-year timing didn’t work weather-wise, so now the events of the film happen in Georgia. I think the smaller films will adapt and we’ll have a good year.
Is the International Branch as important as ever? We saw wins that correlated with Globes and BAFTA (likely our new "international" predictors) more than from CCA and SAG (more "domestic" predictors). Is this reflective of the academy becoming more of an international organization than in previous years? - Jack Till
Are we seeing the effects of post Parasite win? Two Best Pictures films were heavy on foreign languages this year (Anatomy and Past Lives). As the Academy becomes more globally represented. Are we finally at a point where at least 2 minimum Best Picture nominations will be foreign going forward?- Rahat
Walt: I grouped these together because I feel like they’re rather similar. Jack: Absolutely. It’s the single biggest evolution of the Academy over our lifetimes. Rahat: Yep, the international voters have been making themselves heard, especially among the nominations, and the increasing American appetite for international cinema has made that resonate in winners, too. That blog about Best Director from earlier this year, contrasting the American union DGA and the global society AMPAS Directors Branch, I think is happening across every category in ways large and small.
If a work / creative is placed in a category that doesn't match up with what precursors said (Ex. Barbie, much less so Gladstone) should those precursors be punished by receiving lower scores for not "correctly" predicting something so arbitrary? Do they get half credit? Quarter? - Jack Till
Walt: The policy has been no credit! I’ve gleefully sidestepped this problem by not predicting Screenplay anyway, it’s too inconsistent for my taste and I simply don’t believe the precursors have juice. That said, this will be a slight issue moving forward, but for a good reason. Increasingly local critics’ awards have been following the leadership of Galeca: The Society of LGBTQ Entertainment Journalists and consolidating gendered categories into simply Acting and Supporting Acting. I do like this, and in those events if two women, two men, or no women or no men win in the category, that’s simply handled as a tie, or as a year in which no competition was held in the eye of the model.
For the movies that don't win, what is their resonance afterwards? We have famous examples like Shawshank being well known today, but weren't the success at the Box Office nor the Oscars during its time. I'm saddened by the lack of acknowledgement for Killers of the Flower Moon (if only for that great song during it's ending). I was sad last year for Fabelmans. - Rahat
Michael: For many Best Picture winners, the win comes at the cost of its reputation. Shakespeare in Love might be the quintessential example of, People would love this movie if only it hadn’t beaten its rival (Saving Private Ryan). Movies like Parasite or Titanic are cases where everyone was pretty much aligned that they deserved the win, but for most winners, it’s a heavy burden. Is anyone still discussing The Shape of Water or Green Book or Nomadland or CODA? Not really! That’s part of what makes the Oscars fun — they’re deeply political, not in a partisan sense but in the sense that the campaigns and the narratives are so specific to each year. It’s great to dive back into a specific Oscar race and figure out what the dynamics were that pushed, say, The English Patient over Fargo. And hopefully, this newsletter is one of those documents for future retrospectives.
Walt: We’re coming up on word count, but the answer is that a more reliable predictor of long-term success of books and films has been found to be nomination for top prize, not necessarily winning them.
I write all about it in my book, do check it out!
See you in the fall!