January 15, 2021

2003’s The Lord of the Rings: The Return of the King made cinema history in a number of ways when it won the Best Picture at the 2004 Academy Awards. It had the 3rd longest run time at 201 minutes, it was the only final installment of a trilogy to win, it had the highest box office take of over $1.1B, and it won 11 total Academy Awards tying Titanic and Ben-Hur for the most Oscars won.

While the movie will rightfully go down in cinematic history for all of its achievements, there is a lesser-known honor that it also holds: it is the last movie to win Best Picture that was also the top-grossing movie of the year. This may, or may not, come as a surprise to moviegoers. Casual film fans may assume that if a movie won Best Picture, then surely it must have also been a box office smash.

Such is not the case, however. In 2009, for example, The Hurt Locker took home the prized Oscar while only grossing $17M at the box office. Four additional Best Picture winners since then are in the top-10 of lowest grossing movies which won the top award. These include Moonlight (2016, $29M), Birdman (2014, $44M), Spotlight (2015, $47M) and The Artist (2011, $50M).

This disconnect began to concern the members of the Academy especially after three consecutive years of winning movies performing relatively dismally at the box office. With the surge in popularity of comic book-based superhero movies, coupled with the opinion that these films were not considered “Oscar-worthy,” members of the movie Academy were worried that there was a widening chasm between what they considered achievement and what the actual moviegoing public wanted to see.

In order to remedy this perceived problem, in 2018, the Academy announced a proposal to establish a new category reflecting outstanding achievements in “popular” film. Few details were announced at the time, but the implication was the category was intended for blockbuster movies which had achieved mainstream appeal.

Reaction to the proposal was swift and overwhelmingly negative. Movie critics and journalists viewed it simply as pandering to mainstream audiences in the hopes of increasing television ratings. In response, the Academy quietly shelved the idea stating they would "examine and seek additional input regarding the new category". In other words, it is unlikely they will float that idea anytime soon.

With the 93rd Academy Awards set to air in April of this year, all bets are off in terms of box office as the COVID pandemic all but shut down traditional movie watching during 2020. Instead, movies will be tallied using streaming metrics and downloads which will make comparisons to previous years very difficult indeed. Nevertheless, the money says that the top streamed movie will probably not be the top winner come award night.

So, what are the takeaways from this example? Primarily that there are logical reasons for disconnects – we are often just blind to them. While many Best Pictures did extremely well at the box office, Forrest Gump and Titanic for example, there has never been an explicit link between mainstream popularity and critical accolades – they are two different things, each affected by unique factors. Mainstream popularity may hinge on the draw of the leading actor, for example, whereas critical response may be focused on the story or the cinematography. These components may not always align.

In the realm of economics, such a disconnect often exists between the performance of the stock market and the health of the economy. We have witnessed this throughout the past year. Intuitively it would seem to be almost obvious that they should move in tandem, but there are a number of factors which affect the stock market, not all of which are reflected in the economy and vice-versa.

In April, if you watch the broadcast of the Oscars, just keep in mind your favorite movies of 2020 may not be amongst the ones represented in the slate for Best Picture. But until you and I are invited to the Academy, and offered a vote, we’ll just have to remember that movies are meant to entertain us, and if they succeed – it was well worth the cost of admission.

The article above is an excerpt from the Q3 Quarterly Market Commentary. Here is a link to the most recent issue. Complete the form below if you would like to get this emailed to you each quarter.