The changes were revealed in an email sent to members on Wednesday from John Bailey, the new president of the Academy of Motion Picture Arts and Sciences, and chief executive Dawn Hudson.
It also announced that the 2020 presentation would be aired at a much earlier date than expected, in February of that year.
The changes follow an uneasy period for the Oscars, after the four-hour long 90th Academy Awards attracted only 26.5 million viewers, a drop of 19% since the previous year and the first time in a decade ratings had fallen below 30 million.
In their email, the newly-appointed president said the board were “committed to producing an entertaining show in three hours, delivering a more accessible Oscars for our viewers worldwide”.
While none of the 24 awards will be axed completely some will be shifted to commercial breaks during a live broadcast.
It is not known which will be cut, nor what the eligibility criteria for the new popular film award will be.
Although Oscars does award commercially successful films, it tends to exclude genre movies or superhero films like Star Wars.
Many commentators appeared unimpressed with the planned changes, arguing that achievements in production and behind-the-scenes work would lose out on proper credit.
Others claimed the Academy was turning into a popularity contest, while some suggested the new category will be seen as a “consolation prize” giving productions a second-tier status.
That claim attracted particular attention in an award season that has seen superhero movie Black Panther tipped as a potential Best Picture win.
“The Academy is going to be so confused when people aren’t happy that they gave Black Panther their newly invented Consolation Prize Oscar,” film journalist Courtney Enlow said.
Writer Mark Harris tweeted that the award would be perceived as a “ghetto”, adding: “There is already an award for popular films. It’s called ‘money.'”
In the letter, the Academy’s Ms Hudson and Mr Bailey said they were “excited” to share further news about the planned changes.
“We have heard from many of you about improvements needed to keep the Oscars and our Academy relevant in a changing world,” they wrote. “The Board of Governors took this charge seriously.”