I think Rear Window was better, too. It wasn't even nominated in 1954 for Best Picture. Hitchcock was nominated for Best Director, but it was hard back then to win the Director award if your picture wasn't up for Best Picture.
This happened again in 1960, when The Apartment won Best Picture. Hitchcock's Psycho was not nominated for Best Picture, but Hitchcock was nominated for Best Director(his first time since Rear Window, only his fifth such nomination, and his final one.)
On the Waterfront and The Apartment are BOTH great films...but Rear Window and Psycho are greater, with more cinematic genius on screen and solid box office popularity.
I've read that On the Waterfront had heavy support from the acting branch of the Academy, and from a "radical" element who saw Method Acting and "reality" movie-making as the only way to go in 1954. There was actual ANGER towards Rear Window from that group, for seeming "old fashioned" and "too perfectly made"(no "reality") with James Stewart as the star (even as Cary Grant had said of Stewart, "We've had our Marlon Brando for years -- James Stewart."
Alfred Hitchcock famously never won an Oscar for Best Director in competition(they "gave" him a Thalberg award for his career, but that's not a vote from the entire membership.) I am a great fan of Hitchcock. I don't think he needed to win an Oscar every time out, but he was probably more competitive with Rear Window and Psycho than at any other time in Oscar history.
Both Rear Window and Psycho SHOULD have been nominated for Best Picture, and they SHOULD have won.
Hitchocck should have won Best Director for both Rear Window and Psycho.
And "On the Waterfront" (with Brando keeping his Best Actor Oscar) and The Apartment(with Wilder keeping his Best Screenplay Oscar) would be considered great films that didn't win Best Picture or Best Director.
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