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Pushing the Envelope: Why an Oscar is Worth the Hype

Movie and video production studios depend on awards shows to endorse their films and make up for losses in other productions. For example, the movies nominated for the Best Picture Oscar from the 2007 to 2011 awards seasons had an average production budget of $42.1 million and earned $104.2 million in box-office revenue, which is a 247.2 percent margin.  In response, studios continue taking creative risks and striving for the $28.5 million average in box-office sales that an Oscar nomination for Best Picture attracts, according to industry research firm IBISWorld.

“Big risks have led to high rewards during the past five years as less-traditional movies, like the black and white silent movie The Artist, have claimed the top prize, explained IBISWorld entertainment industry analyst Agata Kaczanowska. “Similarly, most of the nominees for the 2012 awards stand out significantly from typical blockbusters. Out of the nominees, winners tend to be lower-budget movies that have experienced a larger monetary boost for the Academy Award nomination.”

During the past five years the average winning movie was made on a $17.0 million budget and earned $82.5 million at the box-office, which is a 485.6 percent margin; more than half of the winners’ box office sales occurred after the Best Picture nomination:

On average, winners of Best Picture in the past five years:

  • Earned $35.3 million in box-office revenue before the Oscar nominees were announced, $29.4 million once they were nominated and $17.9 million after winning the Oscar
  • Earned 42.8 percent of box-office revenue before the Oscar nominees were announced, 35.6 percent once they were nominated and 21.7 percent after winning the Oscar

On average, movies nominated for Best Picture in the past five years that did not win the award but were in theaters during the Academy Awards season:

  • Earned $81.2 million in box-office revenue before the Oscar nominees were announced, $19.0 million once they were nominated and $4.2 million after the awards show
  • Earned 77.8 percent of box-office revenue before the Oscar nominees were announced, 18.2 percent once they were nominated and 4.0 percent after the awards show

According to IBISWorld, the Movie and Video Production industry is expected to earn $29.3 billion in 2013. Although each individual movie’s profit can vary drastically, depending on factors such as production budget and spending on marketing, the industry is expected to earn a profit (EBIT) of 7.4 percent in 2013. As a rough comparison, the average Oscar-nominated movie since 2007 earned 247.2 percent of its budget in box-office sales. Movies that were nominated for the 2011 Best Picture Oscar and earned a higher proportion of their budget in box-office sales included The Artist (297.8 percent), The Help (678.8 percent), The Descendents (412.9 percent) and Midnight in Paris (334.2 percent). The average winner of the past five Best Picture Academy Awards earned 485.6 percent of their budget in box-office sales. This illustrates at an important part of the picture as to why the Best Picture Oscar is a coveted prize.

About IBISWorld, Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit www.ibisworld.com or call 1-800-330-3772.

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