Nicole Kidman and Naomi Watts have been best friends for decades, but their friendship has dwindled in recent years, sources exclusively tell Closer.

Making matters worse is that Nicole, 57, and Naomi, 55, just competed for nominations in the same extremely tight Emmy Awards category.

Naomi emerged with a nomination for Best Actress in a Limited or Anthology Series or Movie for her work on Feud: Capote vs. the Swans, while Nicole walked away empty-handed in that category after heavily campaigning for her role in the international miniseries Expats, which she also executive produced.

“Competing for awards is always a dramatic and intense process for Naomi but being pitted against Nicole makes everything 10 times harder because of their decades of history together and especially because they were best friends from their early 20s on,” says a source in Naomi’s world.

Earlier this year, Naomi recalled meeting Nicole when they were both teenagers at an audition for an “’80s swimsuit commercial,” revealing, “We covered everything, what movies we loved, what friends we had in common, our parents, schools, parties, boyfriends, teenage stuff.”

However, the source explains, “As everybody knows, they have grown apart over the last 20 years.”

The two can still “sit down and relive old times — and they do that when they get a chance — but this last Emmys nominations period saw them pitted directly against each other, and Nicole was especially invested in her project Expats, which she personally produced and got off the ground,” the source notes.

It was shocking Nicole didn’t get any Emmys love in the Best Actress in a Limited or Anthology Series or Movie category “because she absolutely campaigned harder than Naomi did” and “has a killer instinct about this stuff that Naomi doesn’t have.”

Nicole Kidman and Naomi Watts
Dimitrios Kambouris/Getty Images for Michael Kors

Instead, the other nominations in that category went to Jodie Foster for True Detective: Night Country, Brie Larson for Lessons in Chemistry, Juno Temple for Fargo and Sofía Vergara for Griselda.

“Unfortunately for Nicole, [campaigning] wasn’t enough this time around, and Naomi seems to have prevailed strictly on merit,” says the source. “There is no doubt her work in Capote vs. the Swans is some of the best and most interesting of her career, and the critics and the TV Academy paid attention.”

Only time will tell if Naomi ultimately takes home the big prize when the 76th Emmys air live from the Peacock Theater in Los Angeles on Sunday, September 15, on ABC.

“Beating out Nicole for a nomination has only managed to install Naomi against some very tough competition for the final prize, with Jodie Foster and Sofía Vergara emerging as favorites in the category,” says the source.

While Naomi has been nominated for two Academy Awards (for her performances in 2003’s 21 Grams and 2012’s The Impossible), she’s never taken home Oscar gold. She also lost out on a Golden Globe for her performance in The ImpossibleFeud: Capote vs. the Swans marks her first Emmys nom.

Adds the insider, “Naomi’s big hope here is that people remember how many awards she has been overlooked for in the past and give her some recognition, but that’s still going to be a stretch!”