In a New York Times article questioning whether a film like James Cameron’s “Avatar” — that features no major superstars and is based on an original idea that’s not a franchise — will recoup its mammoth budget back, the dreaded $500 million figure raises its head.
The final cost of the film has not been tallied, as Mr. Cameron, who has worked on the project for 15 years, and his collaborators, as far-flung as Weta Digital in New Zealand, continue to complete their work. Published reports have put the production budget at more than $230 million. But the price tag would be higher if the financial contribution of Mr. Cameron and others were included. When global marketing expenses are added, “Avatar” may cost its various backers $500 million.
It’s a posit of course — one that Fox will probably release a counter statement against soon, we’re sure — but an interesting part of the article notes how 20th Century Fox has made sure to not take the lion’s share of risk bringing in a pair of private equity partners — Dune Entertainment and Ingenious Media — “to pick up 60 percent of the budget.” This will likely limit their profit as well, but they have what they think is an ace in the hole to counter it all.
Taking no chances, Fox is backing up Mr. Cameron’s movie with what an executive recently called the studio’s “secret weapon. That would be “Alvin and the Chipmunks: The Squeakuel,” set to open just a week after studio marketers get “Avatar” into theaters. It is the relatively safe sequel to a chipper family comedy that cost about $60 million and took in $217 million at the domestic box office when it was released two years ago.
Furher hedging their bets, Fox has made it part of Cameron’s contract that if production exceeded $300 million, the director would have to wait to see his payout until Fox and others were compensated first. That’s what you call a labor of love, but then again, “Titanic” probably made this guy rich 50x over and that money is what’s allowed him to sit pretty and slowly develop “Avatar” by himself on his own dime for 15 years.
Still, it sounds like 20th Century Fox knew what they were getting into before the signed up which is probably smart on their part given the potential risks. The $500 hundred million mark seems excessive, but who knows. Even at say $300 million, “Avatar” will have to be a massive hit to make that kind of money back.
