Academic journal article Economic Inquiry

What's an Oscar Worth?

Academic journal article Economic Inquiry

What's an Oscar Worth?

Article excerpt

CALBRAITH WHEATON [*]

This article examines the impact of an Academy Award nomination and award for best picture, best actor/actress, and best supporting actor/actress on a film's (i) market share of theaters, (ii) average revenue per screen, and (iii) its probability of survival. The model is estimated using weekly box-office data for a matched sample of nominated and non-nominated films. The results indicate substantial financial benefits for a nomination and award for best picture and best actor/actress. The structure of rewards is consistent with that found in two-stage, single-elimination tournaments. (JEL L1, L8)

"When Oscar Talks, the [Box Office] Listens"

-- Variety, April 14, 1994, p. 7

I. INTRODUCTION

Every year in mid- to late February members of the Academy of Motion Picture Arts and Sciences vote to nominate five films for an Academy Award (an Oscar) in each of 23 major categories. [1] Approximately six weeks later the winners, determined by a second round of ballots by members of the Academy, are announced during the nationally televised awards ceremony. An Oscar nomination or award means different things to different people. For an actress, actor, or director, an Oscar nomination signifies the industry's recognition of significant professional achievement and may result in higher salaries and greater choice of roles or films in the future. [2] For moviegoers, an Oscar nomination serves as a signaling device, indicating which films are viewed by industry experts as being worthy of recognition, whereas for film distributors an Oscar nomination or award often means additional box office revenues.

In this article we suggest that the annual competition for an Oscar may be viewed as a tournament, in which films compete successively for a nomination and an award in a given category, and for more prestigious nominations and awards across categories. The competition clearly satisfies the first requirement for a tournament, as there is no absolute standard for an Oscar nomination or award; nominees (winners) simply must be among the five (single) best films in a given year. Our goal is to determine whether the films that receive an Oscar nomination or award possess what Rosen (1981, 846) describes as "the elusive quality of 'box office appeal,' the ability to attract an audience and generate a large volume of transactions," that characterize a superstar and thus guarantee the convex reward structure found in tournaments.

In estimating the value of an Oscar nomination or award, we employ a panel, data set and an event study framework. Our data set consists of weekly observations on box-office revenues during the period 1978 through 1987 for a sample of non-nominated films and for every film that received an Oscar nomination in one or more of five categories: best picture, best actor/actress, or best supporting actor/actress. The framework we employ enables us to examine gross box-office receipts before and after the announcement of the nominations and awards, using both the non-nominated films and data on films prior to the nominations and awards as a control. This approach allows us to identify the impact of a nomination or award on a film's gross box-office receipts and the probability that a film will remain in distribution following the nominations.

II. DATA

To determine the impact of an Oscar nomination or award on box-office receipts, data were obtained from Variety, a weekly trade journal for the entertainment industry. [3] Throughout the period 1978-87 Variety published data for each of the top 50 grossing films in a given week. [4] Although the number of screens included in the sample has changed over time, the sample consistently covers approximately 11% of all theaters in the United States, which produce approximately 26% to 27% of the yearly motion picture box-office revenues according to U.S. Department of Commerce Reports and 24% of the Motion Picture Association of America annual totals. …

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