Oscars Gold – Part III

As the Academy of Motion Picture Arts & Sciences begins final preparations for the 97th Academy Awards, the Media C-Suite presents its annual review of the values, and value, of the Oscars.

In Part I of this series, we looked at the values of the Academy itself within the context of today’s US$3 trillion global Media & Entertainment industry. Those values highlight the origins of Hollywood as a creative, technical and commercial collective enterprise with a business model based squarely in cinema and public perception of the “movies”. 

In Part II, we looked at the US$1.36 billion in capital assets accumulated by the Academy over more than half a century. That hefty capital pool has been built not by Box Office receipts, but from license fees for broadcast rights to television audiences now controlled exclusively by one of the industry’s largest Streamers, and due to end in 2028.

Part III

The Silver Screen

In 1927 Los Angeles, a collection of 36 film industry leaders founded the Academy of Motion Picture Arts and Sciences as a trade group to promote the growing trend of Americans watching “movies” on the “silver screen” at the local theatre. 

Ticket sales to increasingly purpose-built cinemas across the US and Europe were as lucrative then as streaming subscriptions are today. Then, as now, producing and distributing entertainment content was big money.

At that time, the Box Office was the only game in town.

There was no television. No internet. Radio was just becoming a thing. The technological transformation of the day was from silent “movies” to the wonder of “talkies”. The social experience of attending a film at the local cinema washed over the United States and Europe to become the “great escape” after the stock market crash of 1929.

By 1931, out of a US population of ~124 million people, an average of 2 million people per day attended screenings at Paramount-owned cinemas. Hollywood boomed as the Great Depression raged, and Paramount was only one of five major studios, all of whom were busy taking ownership of theatres and creating proprietary networks of distribution to monopolise ticket sales for their own “originals”. 

Those remaining studio bosses dusted off that old strategy to combat the rise of Netflix, building their own streamers and jealously hoarding their own Original content within propriety walled gardens, led by Disney+, to kick off the “Streaming Wars”.

On the eve of the 97th annual Academy Awards, and as today’s studio moguls grapple with the concept of a creator economy with little interest in those Streaming Wars, let’s take a brief look at some key time frames that lead us to a speculative future for the Academy of Motion Picture Arts and Sciences.

The Original 15 Minutes of Fame

The first Academy Awards took place in 1928, hosted by the Academy’s President, and silent film star, Douglas Fairbanks to an audience of 270 people. Tickets were expensive at US$5.00 (~US$80 today) for a ceremony that lasted only 15 minutes at the newly opened Hollywood Roosevelt Hotel. 

A Century (at least)

One thing that has not changed in at least 100 years is the presence of the studio “Majors”. Universal Pictures, Paramount Pictures, MGM, Warner Bros, Walt Disney and Columbia Pictures were all top companies at the time of the first Academy Awards and are all cornerstones to the largest multi-billion dollar publicly-listed media conglomerates today.

The Space Age

Television allowed the Academy to begin broadcasting the Oscars live to the most lucrative consumer market on Earth with the 25th annual Academy Awards ceremony on March 19, 1953.

By 1998, national cable and satellite networks allowed as much as 20% of the US population, over 55 million people (and as many as a billion worldwide) to merge their social experiences at the local cinema with family time at home, forging cultural references out of film moments, actors and directors that span generations.

The Internet Age

Netflix changed everything in 2007. It took the studio majors by complete surprise.

Delivery of motion pictures over broadband internet may have actually started with Amazon, but each and all of the multi-billion dollar publicly-listed media conglomerates have spent multi-billion dollar budgets to transform themselves from Box Office champions to streaming, stay at home, Netflix killers.

By directly copying the Netflix model.

All of them have been busy creating ownership of SVOD platforms and creating proprietary networks of digital distribution to monopolise subscription sales for their own “originals”.

This re-boot of the original studio cartel-like strategy of owning cinema, distribution and production is predicated on the assumption that only the Studio Majors can afford to produce and distribute Hollywood-level content.

The Next Three Years

The year 2028 marks the 100th anniversary of the Academy Awards and the expiry date for the lucrative license agreement to broadcast the Oscars live to a television audience.

That license now rests in the hands of Bob Iger at the Walt Disney Company, owning both ABC (holding US broadcast rights to the Oscars) and Buena Vista (holding international rights). 

Over the next three years, the rights to broadcast the Box Office-focused Academy Awards are held firmly within the control of the multi-billion dollar publicly-listed media conglomerate with a stated objective to turn the Streaming platform, Disney+, into its core business.

As the 101st Academy Awards draws closer, streamers have embraced a dual Box Office/Streaming strategy with the likes of Netflix, Amazon and Apple competing directly Disney and the other legacy Studios for those high-value Oscars.

And now, just as Studio bosses believe themselves to be major once again, a whole new generation of digital-only audiences, and nomad creators, are building an entirely different media economy.

Prescience

The Academy has not been quietly waiting for the end. Its one primary objective is to recognise the role of technology in the production, distribution and delivery of cinematic entertainment as an art form. As the internet age advances technology, and as creators assert themselves with direct to consumer content, the Academy has been evolving.

In recent years, it has grown its international membership of over 10,000 professionals spanning all forms of content production for all forms of content distribution, from cinema (of course) to television, radio and the internet. The Academy has also amassed total assets in excess of US$1.36 billion and contractual obligations from Disney itself for cir. US$400 million more over the final three years of broadcast rights with ABC. 

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What Comes Next? Where Momentum Will Take Us All in 2025

The most influential industry on Earth is ready to dominate in 2025. One surprise will come as the Audience takes its rightful place at the levers of power.

If one didn’t know better, one might imagine that the Academy has been preparing for a phase in both streaming and the rise of the creator economy. It now wields both a sizable war-chest and a formable, professional army to assume the role of peace-keeper in the “FAST” Streaming Wars for the industry’s next generation.

Perhaps the 101st Annual Academy Awards will be broadcast live from Hollywood over television as it has since 1953.

Or, perhaps, a streaming option with one of the original studio Majors will be announced. Netflix, Amazon and Disney+ are all eyeing the opportunities.

Of course, there is always the option, and the opportunity, for the Academy to commence its second century as steward of art, technology and the economics of entertainment by producing the 101st annual Academy Awards outside of Los Angles and to make the whole world Hollywood.

We can’t wait for the previews.

Thomas Kingston

Thomas is our founder, acting Publisher and contributes an outsized proportion of our articles and editorial pieces.

He is an American lawyer & private equity specialist with 30+ years of international experience in investment strategy. He has lived and worked in London, Dubai, Abu Dhabi and Nicosia as both adviser and executive to several of the world’s largest family offices, institutional investors and State-investment companies. He is also founder of Coherent Media Group, a corporate holding company dedicated to media & entertainment businesses globally.

In his spare time, Thomas is a corporate and political speech-writer and has ghost-written numerous Op-Eds, political/espionage thrillers and science fiction novels.