LOS ANGELES (Reuters) - Short films have quietly been picking up Oscars since the 1930s, but this often overlooked art form is enjoying a boom these days thanks to the rise of online video sites that have drawn in young viewers.

At the 81st Academy Awards on Sunday, animated, live action and documentary films under 40 minutes will again be recognized by Hollywood, albeit below the radar of many viewers.

Most film fans will want to see whether "Slumdog Millionaire" takes home the top prize for best film, and if Mickey Rourke can beat out Sean Penn for the best actor statue, among top honors that will be given out.

Still, makers of short films say the genre has made big inroads with audiences in recent years, especially among the YouTube generation.

"Short films are essential to the Academy because that`s where their future audience is, more even than features," said Carter Pilcher, chief executive of London-based short film company Shorts International. "If you talk to somebody who is 18 or 22, short films are kind of what they are used to."

In the last three years, viewership of Oscar-nominated animated and live action shorts has surged 223 percent a year, Pilcher added. Currently, they can be seen in 112 U.S. movie theaters and also downloaded on iTunes for $1.99 each.

For the filmmakers themselves, short films` inclusion at the Oscars, and the buzz they generate, is critical to supporting up-and-coming artists with small budgets but a lot of creative drive.

SMALL FILMS, BIG IDEAS

"People can still make shorts off their own back, but when it comes to features you need a studio behind you. It`s not a cheap business," said Alan Smith of British directing duo Smith & Foulkes.

The pair`s 9-minute film "This Way Up," about two undertakers` series of mishaps on the way to the cemetery, is in the race for the animated short film Oscar.

"There is a really diverse selection in the short film category," said Adam Foulkes, citing animated short nominee "Oktapodi" made by Emud Mokhberi and Thierry Marchand while they were students at the French art school Gobelins.

In addition to showcasing work that falls outside the mainstream, earning an Oscar nomination for a short film can go a long way toward landing a feature film project.

Disney-Pixar`s John Lasseter, who has been nominated for animated feature Oscars for his movies "Cars" and "Monsters Inc," got his start directing short films. He even picked up an Oscar for one, "Tin Toy," in 1989.

"A feature film is the next step, definitely," said Jochen Freydank, who is nominated for a live action short Oscar for his 14-minute film, "Toyland." The film tells of a German boy during World War II whose mother convinces him his Jewish neighbors are being sent to a land filled with toys.

"But I don`t do short films just to prove that I`m a good director," Freydank said, adding that he enjoyed the creative freedom of making his own film. "It gives you the opportunity to tell a story the way you want to tell it."
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