December 16, 2009 / 6:04 AM / 9 years ago

"Avatar" starts long march toward profitability

LOS ANGELES (Hollywood Reporter) - “Titanic” director James Cameron releases his first dramatic feature in 12 years this weekend, and there’s almost as much buzz about its costs as the film’s groundbreaking motion-capture animation.

Distributor 20th Century Fox first claimed that its costs on “Avatar” totaled $237 million but more recently refused to confirm any number. Most industry observers believe the picture cost a minimum of $300 million to produce.

Even at the lower studio figure, that’s a lot of green stuff to expect to make back from a mostly animated picture populated by blue aliens.

Cameron appears unfazed by such pressures.

“I don’t think it means jack s—t,” Cameron said. “To be perfectly honest, I think the studio has generated the myth about its costs to help in the selling of the movie. I have seen this happen with ‘Terminator’ and ‘True Lies’ and ‘Titanic,’ and it helps the film become a must-see film. By the way, doesn’t that mean it’s a bargain to see such an expensive film for the same amount it costs to see any other film? It’s the deal of the century!”

So just how much can “Avatar” ring up during its all-important opening weekend? Broad consensus has the sci-fi actioner — starring Sam Worthington (“Terminator Salvation”) and Sigourney Weaver — fetching $80 million or more through Sunday, though Fox has been floating much lower figures to tamp down expectations.

Toting a running time of 2 hours and 36 minutes, “Avatar” starts its long march toward profitability with 12:01 a.m. Friday performances set for more than 2,000 mostly 3D locations. For the rest of the weekend, “Avatar” will play in some 3,400 theaters boasting almost 3,000 3D screens and roughly an equal number of 2D auditoriums.

“Avatar” debuts simultaneously this week in most foreign markets, with more than 5,000 3D screens in place internationally for the release.

“Avatar” is likely to draw best among male moviegoers, but it will bear watching how it skews in the age demo. Heading into the weekend, prerelease tracking surveys indicate a good chance the film will draw well among both younger and older males.

As for the women, Sony is targeting older females in a counter-programing play with the romantic comedy “Did You Hear About the Morgans?” Starring Hugh Grant and Sarah Jessica Parker, “Morgans” will likely produce $10 million or so through Sunday.

Now, back to the question of “Avatar” costs.

Helpfully, Cameron has agreed to defer profits on “Avatar” until certain box office thresholds are reached. That makes its profit profile a bit easier to dissect.

The broad rule of thumb on profitability is that total domestic box office must equal production costs to reach break-even, with global marketing expenses — totaling $150 million on “Avatar” — covered by ancillary income such as home entertainment, TV revenue and merchandising. As an action picture, “Avatar” could overachieve internationally, and merchandising should prove unusually bountiful with partners including McDonald’s and mass merchants.

So even if the studio’s official budget estimate is, ahem, optimistic, prospects for profitability lie squarely in category of tough-but-doable.

Amy Miles, CEO of No. 1 U.S. exhibitor Regal Entertainment, recently predicted “Avatar” would make about $250 million in the U.S. and Canada. All things considered, that also could be the threshold at which executives at Fox and Cameron’s Lightstorm Entertainment banner exchange lusty high fives.

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