"In the Bedroom," a wrenching family drama, has emerged in recent weeks from the clutter of year-end movies to become a strong contender in Hollywood's annual race for the Academy Awards.

Its distributor, Miramax Films, has trumpeted the film in television, radio and newspaper advertisements as one of the year's must-see movie experiences, listing all the awards and nominations it has already received, including a Golden Globe nomination for best motion picture drama. But "In the Bedroom" did not begin as a studio release. It was picked up at last year's Sundance Film Festival, the annual celebration of American independent movies founded two decades ago by actor Robert Redford's Sundance Institute and held each winter in Park City, Utah.

As the 20th annual edition of Sundance hits full swing here this week, the search for Oscar-worthy films has become part of the landscape, reflecting a "home run" mentality, as one filmmaker puts it -- whether it's in pursuit of award-type films or big box-office payoffs -- that has swept over this festival in recent years. Some say it is at odds with the original intent of Sundance.

This year, about 200 features and documentaries will play at Sundance -- along with dozens of other films at the festival's unrelated satellites such as Slamdance and Slumdance -- with as many as 20,000 filmmakers, fans and journalists expected to attend.

Major festivals such as Cannes, Toronto and Berlin have become crucial to the marketing of movies, but it's Sundance that has the most direct ties to Hollywood because of its links to studios and American filmmakers.

The festival's growing importance to Hollywood also reflects the sea change in the film industry over the last quarter-century, as movies open on thousands of screens, living or dying on their first weekend in release, and blockbusters are made by dumbing down scripts so they will appeal to teenagers who flood the megaplexes each weekend.

In the past, Hollywood studios regularly turned out epic productions like "Ben-Hur" and "Lawrence of Arabia" that could be counted on to become best picture candidates at the Academy Awards. Today, the studios seem more consumed with creating and marketing blockbusters, whether it's the computer-enhanced wizardry of "Harry Potter and the Sorcerer's Stone" and the upcoming "Spider-Man"; green-lighting risk-averse sequels like "Rush Hour 2" and "The Mummy Returns"; or relying on star-driven fare like "Ocean's Eleven."

As a result, the studios have come to rely on their art-house divisions to comb the festivals looking for thought-provoking, character-driven movies that can give a studio the prestige that comes with an award-winning film.

To that end, Sundance has proved to be fertile territory. Fine Line Features, the art-house side of New Line Cinema, discovered a small Australian film called "Shine" at Sundance and then rode the 1996 release to seven Academy Award nominations, including best picture. The critically acclaimed 1999 film "Boys Don't Cry" was acquired by Fox Searchlight after executives viewed only sample footage of the uncompleted film at Sundance. The movie's lead, Hilary Swank, went on to win the Academy Award for best actress.

Two years ago, Paramount Classics, the artsy label of Paramount Pictures, paid less than $2 million for a Sundance picture called "You Can Count on Me," which told the story of a wayward brother who comes back to live with his more strait-laced sister in a small town. Capitalizing on strong reviews, the film went on to take in nearly $10 million while receiving Oscar nominations last year for its female lead, Laura Linney, and director Kenneth Lonergan's original screenplay.

Last year, Sundance gave birth to four films that are now in the hunt for Oscar nominations. One is "In the Bedroom"; the second, "Memento," is a mystery-told-backward tale released by Newmarket Film Group. The other two movies were acquired at Sundance by Fox Searchlight, the tonier label of 20th Century Fox: "The Deep End," about a woman who spirals out of control while trying to keep her son from being found culpable in a murder investigation; and "Waking Life," a quirky animated film about a man in a dream state who encounters characters talking about their views on human existence.

The reason Sundance is so important for an Oscar-worthy movie, filmmakers say, is because it provides a great launching pad, with hundreds of journalists and critics in attendance who can give a film the kind of buzz money can't buy.

"You can't really have a better start," said "Deep End" director David Siegel. "It has an incredible amount of power that can influence someone's career--or life, for that matter. It's kind of terrifying. If you are looking to get something out there, there is no greater stage."

To purists, or at least those who remember what Sundance was like in earlier days, the emphasis on Oscar shopping, deal-making and big-name celebrities places enormous pressure on young filmmakers to make movies that are commercially viable. Among the many stars at this year's festival are Robin Williams, who has a thriller called "One Hour Photo," and Jennifer Aniston of "Friends" fame, who stars in a movie called "The Good Girl."

Director Penelope Spheeris, who has worked in both the studio and independent worlds with such films as "Wayne's World" and last year's documentary "We Sold Our Souls for Rock 'n' Roll," is not one to begrudge Sundance a few mega-deals or even a few celebrities on the red carpet. But she is dismayed at how the festival has changed during the years she has been coming here.

"What has happened," Spheeris says, "is the studios, mainstream filmmaking and star-laden pictures have inundated Sundance and changed it from its original intention. . . . Let the up-and-coming filmmakers have their chance at film festivals."

But Geoffrey Gilmore, the festival's longtime program director, stresses that Sundance still shows movies that cost under $10,000 to produce and also some that cost more than $10 million, but he insists the festival remains a "discovery" festival at heart, where new talents get their works shown.

Money Also Motivates Distributors at Festival

It isn't only Oscars that distributors are after. It's also money. Occasionally, a film will debut at Sundance that will far exceed everyone's box-office expectations. That certainly happened with the documentary-style fright film "The Blair Witch Project," which was picked up at Sundance by Artisan Entertainment and went on to gross $140.5 million in 1999.