Want to know how to revitalise the Australian film industry? The answer, my friend, is blowing in the middle.

After a year of desperate hand-wringing over the apparent collapse of the domestic cinema audience for Australian films, the box office results for Russell Crowe’s directorial debut, The Water Diviner, has blown the gloom merchants out of the water.

Opening on Boxing Day, the Gallipoli-themed anti-war film managed to earn an average of more than $1 million per day in its first week of release, making it the highest grossing local film of 2014. At the time of writing it had gone on to earn $8.4 million, a figure likely to continue upwards for some time yet.

There is a very clear lesson here. With his passionate meditation upon the after-effects of war, Crowe has demonstrated that local films are not all destined to be overlooked. In terms of audience-appeal, our filmmakers and agencies may have simply been making the wrong type of movies – ones conceived and produced with insufficient ambition, production values and cinematic scale. That doesn’t mean they were always bad – there were several very strong titles in 2014. It’s just that they were seen by virtually no one other than the critics who had already seen them for free.

If the local film industry wants audiences to see its films – and of course it does, otherwise it loses vital political support from governments and the taxpayers who vote for them – then it needs to make more films like The Water Diviner.

And by ‘like this’, I mean more well-crafted films with relatively high production values and generally inspired by real-life stories that resonate with older audiences – the people who actually still turn out to cinemas. In other words, intelligent films with stars (or at least accomplished and moderately well-known actors) with budgets in that productive space between the smell of an oily rag and a mega-expensive studio behemoth, often using international rather than purely local components in terms of story, setting and cast. Crowe’s film has a few scenes set in the Australian outback but is largely set in Turkey.

Another way of putting it: if we want to see local titles connecting with local audiences we need to produce more middlebrow films.

I know that sounds counter-intuitive and almost shocking for a critic to suggest. The term ‘middle brow’ has long served as critical shorthand for a type of cinema that at its worst, exhibits a kind of smug, middle-class superiority that isn’t at all earned; that acts as if it thinks it’s above the hoi-polloi while simultaneously failing to exhibit any major aesthetic ambition or risk-taking.

But it depends on how you define middlebrow. If the phrase simply refers to films sitting between the two furthermost extremes of the low-brow at one end (say, The Hangover) and the more intellectually challenging (the work of Michael Haneke), then it has to include all manner of productions, from the smarter genre titles to the historical dramas, biographies and literary adaptations the Brits have long gravitated towards in both film and TV, often achieving both domestic and international success.

According to the latest figures available, local films were tracking at a disastrous 2.3 percent share of the Australian box office in September 2014, the second lowest figure since 1977. Good reviews for some local titles made little or no difference. Neither did the industry’s relatively recent shift in emphasis to genre films. Witness the instant collapse of such touted titles as These Final Hours (science fiction), The Babadook (horror), Felony (crime) and The Little Death (sex comedy).

Yet it’s not true that all Australian films failed to draw audiences to cinemas. Apart from the notable exception of Wolf Creek 2 (a campy sequel to a hit horror movie), last year’s most popular local (or part-local) films with Australian audiences fell into the middle ground: The Railway Man, a British-Australian co-production starring Nicole Kidman and Colin Firth, and Tracks, featuring Mia Wasikowska as the camel-trekker Robyn Davidson.

Tracks’ $2 million-plus earnings reflected its relatively ‘arty’ exploration of a difficult character while its widescreen spectacle and literary connections anchored it into the middle ground as a reasonably marketable property. The Railway Man’s more impressive $7 million meanwhile reflected its star power and foreign locations (Burma and the UK – I’d be surprised if many viewers were even aware it was an Australian co-production).

You only need to see how the British film industry successfully carves out an audience in the teeth of competition from US blockbusters to see what too many Australian filmmakers and federal and state funding agencies are doing wrong in terms of winning over audiences.

This summer is the season of the high profile, awards-friendly UK film about great British geniuses – from The Imitation Game, about the founder of computer science, Alan Turing, to the story of paralysed theoretical physicist Stephen Hawking in The Theory of Everything and the eccentric personal life of the great British painter J.M.W. Turner in Mike Leigh’s Mr. Turner.

Apart from their common true-life subjects, these films share the same cultural space in that they fall into that middle category between lowbrow Hollywood action adventure and crass comedy and rarified European art films. In commercial terms, they exploit a gap in the market.

I’m not arguing that Australian filmmakers should produce no low-budgeter genre films. Indeed we should, if anything, be producing more edgy, risk-taking films at the lower-end of the budget scale rather than ultra-bland pond water like Galore with no discernible target audience. But to pretend that taxpayer subsidies can be maintained for an industry that fails to achieve a reasonably consistent flow of popular successes and widespread admiration, both here and overseas, is naïve and ultimately self-destructive.

I totally get why some will argue that the concept of art being readily divisible into low, medium and high ‘brows’ has decreased in meaning in a society of mass communication, where the finest artworks can often slip between these categories. (How, for example, do we define jazz in terms of the ‘brows’?) But in as much as the brow distinction is still employed and is widely understood, it has a certain usefulness.

Every style of filmmaking has to be considered in terms of its own merits. Any sweeping condemnation based on its ‘brow’ is shortsighted and ultimately narrow-minded. While many middlebrow films are overly polite mush, others, such as Lawrence of Arabia, The Imitation Game, My Brilliant Career and Joe Wright’s Pride & Prejudice, or TV’s Mad Men or Borgen, are not.

In its year of release, 2009, Bruce Beresford’s film Mao’s Last Dancer – an ultra-middlebrow film – was the top earning local film domestically, with box office of $15.4 million. It’s not the greatest film ever produced by Australia, perhaps, but neither is it anywhere near the worst, and in 2010 it became the nation’s most popular Australian title on DVD. For its distributor, Roadshow, it was the third highest-selling DVD from anywhere that year.

There is an obvious conclusion here. But how many of the industry’s power brokers have drawn it?