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The men from the American Turf and Carpet company were busy putting the final touches to their crowning achievement. Frantically cutting and taping their way along the middle of what in normal times is Hollywood Boulevard, they covered their creation with plastic sheeting as they went, as much to protect it from the feet of tourists as from the elements.

"What's going on?" asked a startled Chris Miller, visiting for the week from northern Colorado. On being told this particularly shabby stretch of Hollywood was being transformed for its starring role hosting the Oscars, and that beneath the plastic sheeting lay the hallowed red carpet, he squirmed in mock excitement. "I can feel the power," he exclaimed.

Around him caterers hustled by, bearing platters of food to be offered to nominees after the event at the annual Governor's Ball, hosted this year not by one of their own, governor Arnold Schwarzenegger having departed, but by the decidedly budget-conscious Jerry Brown. Japanese TV crews choreographed elaborate news presentations, corralling some of the sidewalk performers stationed outside Grauman's Chinese Theatre as extras: Elvis seemed too busy to help, and Jacko wouldn't stop whooping, but Toy Story's Woody played along.

Beneath them all, the red carpet squeaked and crackled under its plastic cover, waiting for the moment when it would be revealed in all its pristine glory, ready to help the delicately inflated egos of the world of movies float past adoring crowds before entering the Kodak theatre, which, despite the best efforts of some of the most talented special effects people in Hollywood, cannot disguise the fact that it is a shopping mall attached to a hotel.

But illusion and artifice are the charm and business of Hollywood, its pompous glitz fulfilling our most base fears and aspirations. And this year the illusionists are pulling off their trick once again, congratulating themselves on an undeniably fine crop of intelligent, thought-provoking, handsomely crafted films while preparing to unleash the customary torrent of drivel on audiences deluded into believing that a pair of plastic glasses will make a dud look like a classic.

This year's season of stupidity really kicks into gear in the US in May as successive weekends bring audiences Pirates of the Caribbean: On Stranger Tides, The Hangover 2, Kung Fu Panda 2, X-Men: First Class, Super 8, Green Lantern, Cars 2 and Transformers: Dark of the Moon. By early July any remaining sentient filmgoers will possibly never want to go to the movies again. And we won't have even got to The Smurfs, Spy Kids 4: All the Time in the World or Final Destination 5.

Proof that all this trickery and chicanery works came last week courtesy of the suits at the Motion Picture Association of America, who announced that global box office takings hit a record high of $31.8bn in 2010. The fact that the number of tickets sold in the US declined by 5% was glossed over by the news that revenues had stayed the same, thanks to the growth of 3D. That's the way the money goes: fewer tickets at higher prices. The situation has not escaped the attention of the critics, who have been mustering their fury and sorrow to unleash a series of attacks on the state of things. The lengthiest diatribe comes in the current US issue of GQ magazine, where film writer Mark Harris rails against the branding of Hollywood studio movies, a trend that prizes brand recognition and marketing over originality.

Yet for decades the studio system has been about the business of entertainment, a subdivision of the leisure industry, rather than the art of film-making. Sometimes there has been a happy, if freak, collision of the two, but generally they are distinct sectors of an occasionally intersecting universe. This year, with the solid, some would say spectacular, showing of the Oscar best picture nominees, many involved in making the sorts of films that critics fear are lost express the hope that the industry has turned a corner.

"I like to think it's turning around," says Gary Gilbert, a producer on The Kids Are All Right, one of this year's best picture nominees. "I think the major studios' priorities are the huge, tentpole films, and they have the attitude that instead of financing the production of independent movies they would prefer to see the finished article at a festival and have the opportunity to buy it."

The Kids Are All Right, Lisa Cholodenko's lesbian-family-artificial-insemination-reunion drama, is the sort of film that on paper sounds as though it should command the smallest of niche audiences. But it has grossed $29.5m at the US box office after being bought by Focus Features for $4.8m. Not bad for a $4m production budget.

Even getting that budget together was a struggle, says Gilbert: "It was excruciating. It didn't all come together until one or two days before principal photography started. It was very, very shaky ground."

The performance of Cholodenko's film has been repeated, and in some cases surpassed, by the other best film nominees. Most notable is The King's Speech, which, with the help of Harvey Weinstein, has turned its $15m production budget into a global box office take of $237.5m. For perspective, that figure puts The King's Speech at number 340 on the all-time worldwide box-office chart, two places above Saturday Night Fever. Darren Aronofsky's Black Swan, made for $13m, has taken $204m worldwide, while The Fighter, with a budget of $25m, has grossed $105.6m. These are indeed heady times in the world of independent film.

For Alix Madigan, a producer of Winter's Bone, another low-budget best picture nominee, which has seen its $2m budget recoup $8m worldwide, this year's crop of films – particularly their financial success – could provoke the studios to re-examine their role.

"These films have paved the road for a greater allowance for adult fare and a branching away from branded entertainment," she says. "It's an exciting time and hopefully the studios will take note of that and steer their development slates more towards the sort of films that have done well this year."

Part of that resurgence was seen at this year's Sundance festival, the Robert Redford-led indie film gathering held each year in the snow of Park City, Utah, which eased the birth of Reservoir Dogs and The Blair Witch Project. After a few years in the doldrums, Sundance 2011 saw a return to, if not the glory years, then a vibrant marketplace. "Films with few stars and complicated stories were being sold for big advances," says Madigan. "That was a very heartening thing, to see because we didn't see it last year."

She cautions, however, that the independent sector has been here before. "The one big hope I have," she says, "is that this is not some big bubble and we all revert to the dark years of independent film."

For GQ's Harris and other critics, one of the Hollywood studio films that took the industry down a path from which it has never recovered was Top Gun, that seemingly inoffensive piece of pap that ushered in the era of the concept movie in 1986, the film genre that boasted a plot that could be summarised in 12 words. The people who grew up on Top Gun, asserts Harris, now run the movie business and their principal interest in a movie is its bottom line, not its aesthetic. "Man, I loved Top Gun," says film distributor Tom Quinn. "What's wrong with Top Gun? But I also loved Black Swan. I can't wait to go on the Black Swan rollercoaster. I can't wait to see what happens a couple of years from now. Will everyone take up dancing? Will suicide rates among young ballerinas go up?"

Quinn is a senior vice-president of Magnolia Pictures, which distributes foreign, documentary and American independent films in the US. You'd expect him to be in a state of anxiety over his business, but he isn't. On the contrary, like many in the US independent sector he is optimistic that new audiences are being drawn to intelligent film-making and that they are finding ways of seeing the films.

"People bemoan the industry, but it hasn't changed," he says. "What is growing is a much younger audience that is more familiar with many more ways to view films." He gives an example: Black Death, a British independent horror movie about the plague starring Sean Bean. It hasn't been released in cinemas in the US yet, but Quinn has put it out on VOD – video on demand streamed over the internet. "We launched it four weeks prior to its theatrical release at the same price as the theatre ticket," he says. "It's taken $1m in less than 10 days."

For Quinn and his company, the business model is that of sport. "If you're a sports fan who follows the local team, you watch them online, you follow them on your phone, you listen to radio commentary in the car. Why can't entertainment be consumed in the same way? There are now 65m homes with VOD. We could never replicate that on 35mm prints. It's changed the economics of our business, and made it feel like a business that can work."

Credit : guardian.co.uk