Why Does Hollywood's Biggest Night Keep Getting Smaller?

If you were one of the 32 million people who tuned in to the Academy Awards last week, congratulations. You are part of a vanishing elite. The 80th Annual Academy Awards on Feb. 24 were the worst-rated Oscars on record. Think about that for a moment. A smaller chunk of the population — 29 percent of households with TVs in them — watched the show than ever before. Compare that with Oscar's ratings peak, 1954, the year From Here to Eternity won. Almost the entire nation — 82 percent — was sitting in front of black-and-white, tube-powered TV screens on that night. Even as recently as 10 years ago, when a water ride called Titanic took home the big prize, more than half the country was still watching. Now, less than a third do.

To be fair, this year's ceremonies did have unique challenges. For one, there weren't a lot of crowd-drawing names on the nominees list. For another, Hollywood was still hungover from that three-month writers' strike. After all the bitter squabbling over download residuals, nobody was in much of a mood for a party, even if they could find one (Vanity Fair canceled its famous après-Oscars ball just before the strike ended, although Prince picked up some of the slack with a last-minute happening in the Hollywood Hills). Still, who's kidding whom? The truth is, ratings-wise, the Academy Awards have been on a general downward spiral for decades. Furthermore, Oscar's imprimatur doesn't put people in seats like it used to. Gone are the days when a gold statuette could help turn even a moody period piece like The English Patient into a substantial hit. That film had grossed about $42 million before the nominations were announced on Feb. 11, 1997. By the time the Oscars were awarded, it was up to about $63 million, and went on to sop up another $15 mil in the following months. Michael Clayton has made just $9 million since it was nominated.

The Oscars used to be a bonding event that brought the bulk of the nation together. Sure, it was sometimes tacky and always too long — Bob Hope was cracking zingers about endless acceptance speeches before Jon Stewart was even born — but it was still a shared cultural experience on the grandest of scales. Audiences don't get many of those these days. And now — with fewer total viewers than American Idol's recent season premiere, fewer than the Super Bowl, fewer than even AFC Championship games — the Oscars no longer qualify as one. The news has shaken confidence within the Academy. ''Honestly, I feel a little bruised,'' says Bruce Davis, executive director of the Academy. ''At some point will we be looking at a different kind of awards show? That's conceivable. We gave out Oscars before there was any television broadcast at all. We may have to live in an era where we're doing it for a much more restrictive audience.''

But before the Academy turns the 81st awards into a video podcast shot in Davis' basement, let's look at how the movie industry's biggest night got so small — and how it might start living large again.

1. Nominate More Hits
Shocking as it sounds, Oscar used to reward massive hits. It wasn't even so long ago. Titanic, The Lord of the Rings: The Return of the King, Rain Man, and Forrest Gump were all the highest-grossing films of their years. Reaching further back, The Godfather, The Graduate, Annie Hall, and Rocky were not just hits but cultural phenomena. Lately, though, it feels like the Academy and America wouldn't be good Netflix friends. For the past two years, only one best-pic nominee each year has grossed more than $100 million domestically. In 2005, none did. Davis thinks this is the primary reason fewer people are watching the Oscar telecast. ''Some of these movies are just too difficult for a mass audience, frankly,'' he says. ''I think that trend of the studios making big action pictures and the specialty houses making small prestige movies is catching up to us.'' Which means the Academy has to...

2. Tell Hollywood to Make Hits Worth Nominating
Studios have sunk most of their resources into big-budget franchise movies. Indie divisions have focused on low-budget auteurist fare. And what almost no one is making today is the mid-budget, star-driven drama: the exact type of movie that used to be Oscar's bread and butter. What Hollywood needs to do is resurrect movies that both critics and audiences love. (This year, only The Bourne Ultimatum would have fit the bill.) Sadly, no one, including Davis, thinks Hollywood is likely to come around. The low Oscar telecast rating this year, he says, ''could be a one-year blip, but it doesn't look like one. We may just have to get used to smaller audiences.''

3. Pick Up the Pace
Even if every nominated film had grossed $300 million, this year's Oscar telecast would still have been a bit of a snore. It was simply too darn long. The Academy has to rethink handing out so many awards on-air. ''As long as you're going to have to do a Sound Editing award and a Documentary Short Subject award, the show's going to have a boredom factor,'' says veteran Oscar scribe Bruce Vilanch. But the Academy has no intention of cutting down on the number of categories. Its objective, remember, is to honor all areas of great filmmaking, not generate high ratings. ''We know that a one-hour show would attract a larger audience,'' Davis says. ''We're not doing that, and it's not because we're too dumb to know that people aren't fascinated by who wins best production design.''

This kind of thinking isn't exactly audience-friendly. ''The most exciting part of the show is the speeches, but then they give these guys 45 seconds,'' says producer J.C. Spink (A History of Violence). ''It makes no sense.'' And no, the speeches don't have to be boring. Director Nicholas Stoller (Forgetting Sarah Marshall) suggests bringing back the good ol' days: ''Whatever happened to the old incomprehensible political message? This year, no one went on a weird rant that made no sense.'' And one more thing, he says: ''We need Cher back.''

4. Amp Up the Star Power
Here's a shocker: People watch the Oscars because of the stars, not the movies. That was actually news to the Academy. Until a few years ago, the assumption was that strong horse races drove viewership up, Davis says, but when ABC began conducting focus-group research, they found that almost no one had seen all five Best Picture contenders — and that it didn't affect whether they watched the show. ''The audience is there for the aspects of the show we're a little embarrassed by,'' he says. ''They like the red carpet and the movie stars.'' This year, the dearth of high-powered nominees — George Clooney and Johnny Depp notwithstanding — had a real impact. Fans in the bleachers along the red carpet saved some of their most rabid cheering not for movie actors, but for TV stars Patrick Dempsey and Miley Cyrus. Would the ratings have been better if the Academy had locked in more high-profile presenters? Some think that's ridiculous. ''There was no Leo, but there was George and Nicole Kidman, for f---'s sake,'' says one insider. ''What do people want, Brad Pitt?'' Well, yeah. And Angelina, while we're at it. The easiest way for the Academy to secure higher ratings again would be to persuade non-nominated stars to show up ''for the health of the industry.'' Maybe they could even pay for Lindsay Lohan's limo.

Now for a few blunt questions. If the Academy were actually willing to accept all these modest proposals, could they recapture their past glory? Will 82 percent of the country ever watch the Oscars again? Probably not. In a fragmented media culture — with a glut of awards shows and 24-hour entertainment coverage dimming the mystery of stardom — the chances that the Academy Awards can regain their From Here to Eternity luster are slim. So movie fans have two wildly divergent options. They can get used to thinking of the Oscars as a kind of dull, elitist ceremony that, whatever its flaws, rewards extraordinary work — which certainly ain't nothing. Or, taking a cue from countless acceptance speeches, they can dare to dream. They can dream that Hollywood will once again make great, star-driven dramas that demand attention. Or they can dream that the Academy will wise up. ''I've been saying for years the only way the Academy will ever change the show is if the ratings really, really dropped,'' says Vilanch. ''I don't know if this is the year that the ratings dropped enough for them to rethink what they do after 80 years. It might be.'' In that spirit, we'll predict next year's EW cover right now: ''How Oscar Got His Groove Back.''
(Additional reporting by Vanessa Juarez, Ari Karpel, Missy Schwartz, Nicole Sperling, and Adam B. Vary)