Hollywood is confused and angry about the new Oscar category. What even counts as a ‘popular film’?

The sudden creation of a separate Oscar for popular films hit the industry like a tsunami this week. Stunned Hollywood executives are sifting through the aftermath.

The Academy of Motion Picture Arts and Sciences’ newly conjured category for outstanding achievement in popular film — which would stand independent from the venerable best picture award — is intended to save the annual ceremony from diminishing ratings.

Analysts have blamed the declines on the academy’s tendency to overlook critically acclaimed blockbusters (“The Dark Knight,” “Wonder Woman”) in favor of more obscure art films such as “Moonlight” and “Call Me by Your Name.”

But the Wednesday announcement came as a shock to the industry, including multiple academy members who said they were not consulted on the matter.

Though a few show-business leaders expressed support for the idea, most reacted with befuddlement, and some with anger, about what it could mean for the future of the prestigious awards and, by proxy, the film business that considers the Oscar its highest honor.

“It’s created confusion, and they’re diluting their brand,” said one studio executive who spoke on condition of anonymity because of the sensitivity of the matter. “Doesn’t this dilute what ‘best picture’ is?”

The announcement prompted widespread speculation about what the change would mean for distributors that spend millions of dollars every year to push their top contenders on academy voters. Oscars represent more than just an ego boost. They can lift box-office and video-on-demand sales and give the winning studio a shot of artistic credibility.

A lack of information exacerbated the backlash. The academy provided no explanation of what would constitute a “popular film,” leaving studio executives and producers guessing how it would affect their upcoming campaigns, which begin in the fall.

“In creating this award, the Board of Governors supports broad-based consideration of excellence in all films,” the academy said in a Wednesday statement.

A spokesperson for the academy declined to comment Thursday.

Left with numerous questions and few answers, awards consultants and publicists scrambled to dig up information that they could relay to clients.

Would a movie’s popularity be determined by box office or budget? If so, what’s the threshold? What about a movie that flops domestically but does well overseas?

And how would the change affect the prospects of critically acclaimed films, such as Walt Disney Co.’s “Black Panther” and Paramount Pictures’ “A Quiet Place,” that straddle the line between commercial film and awards contenders?

Some complained that the idea was a half-baked, ham-fisted way of bringing more recognition to commercial movies that may draw more TV viewers.

“I think it’s a genuinely foolish idea that will not solve the problem,” said Donna Gigliotti, Oscar-winning producer of “Shakespeare in Love” and “Hidden Figures.” “I think the membership should have been consulted.”

Another problem is that an Oscar set aside for blockbusters could be viewed as a consolation prize rather than a true honor. Some traditionalists privately compared such a statuette to the MTV Movie Awards and the People’s Choice Awards.

“It’s like saying, ‘You weren’t good enough for best picture, so we’ll give you best popular picture,’ ” said one academy member who requested anonymity to protect relationships. “Gee, thanks.”

Nonetheless, the major studios, which have recently struggled to get Oscar attention as nominations go to little-seen specialty fare, could benefit from the decision.

One company that stands to reap the rewards is Walt Disney Co., which makes more popular movies than any other studio with brands including Star Wars, Pixar and Marvel — typically not considered best picture bait. Disney also owns ABC, which broadcasts the Oscars. The bulk of the academy’s annual revenue, totaling more than $100 million according to tax documents, comes from TV license fees that originate from Disney and its subsidiaries. (The company declined to comment.)

But even that advantage would come with complications. Because a film such as “Black Panther” or Paramount’s “Mission: Impossible — Fallout” could be eligible for either award — best picture or best popular movie — the studios would probably have to decide on which category they want to focus their campaigning energies and spending. As with the animation category, a popular film could be nominated for both awards, potentially splitting the vote.

Still, many insiders acknowledge that something needs to change to maintain the popularity of the Oscars and keep the show relevant. The Oscar telecast once attracted nearly 40 million viewers, but this year, the television crowd slumped to a historic low of 26.5 million.

To address the problem, the academy years ago expanded the best picture category to as many as 10 films. But that just resulted in more nods for obscure indie pictures.

Some influential players, including former Fox Filmed Entertainment chief Bill Mechanic and “Get Out” producer Jason Blum, praised the “popular” Oscar decision as a necessary step in the right direction.

Some stressed the need to make the show more entertaining for viewers while still maintaining the integrity of the awards.

“The academy has to figure out how to be more relevant to the broader television audience, because we aren’t competing where we need it to be,” said Bill Gerber, producer of the upcoming remake of “A Star Is Born” starring Lady Gaga.

To that end, the academy took additional steps to adapt the broadcast for shortening attention spans. The 2020 ceremony will be earlier on the calendar (Feb. 9), for example. The academy also promised to limit the broadcast to three hours by doling out certain less mainstream awards during commercial breaks.

“I consider it our job to entertain people,” said veteran film and TV producer John Davis. “So let’s entertain them.”

Times staff writer Meg James contributed to this report.

ryan.faughnder@latimes.com

Twitter: @rfaughnder