UPDATED: So 'Avatar' is Approaching a $500 Million Budget? Sorta, Probably…
It's a budget that will probably be 'rumored' forever
UPDATE: As I briefly mention in my comments on Michael Cieply's "New York Times" piece concerning Avatar's budget, his numbers are a bit interesting to say the least. Dave Poland has taken an even closer look and while Cieply's math leaves a lot of holes in his analysis saying Avatar will be a $500 million film, it does have some interesting tidbits to go along with it. Just know the actual cost of Avatar is likely never going to be realized and let's just hope it lives up to its billing. Again, here's a link to Poland's analysis.
Okay, so remember back in March when TIME's Josh Quittner published in a feature article headlined "3-D: The Future of Movies" and said James Cameron's Avatar was working on a $300 million budget and how Fox came out and even Quittner commented on my article saying "the $300 million number in his article is an error and it should have read $200 million." Well, perhaps it should have read $500 million as a new article at The New York Times begins with the following paragraph when talking about Avatar:
Can a movie studio make money on a film based on an original and unfamiliar story, with no Hollywood superstars, a vanishing DVD market and a price tag approaching $500 million?
The article, written by Michael Cieply refers to Avatar as "among the most expensive movies ever" and does refer to his listed budget as an "estimated half-billion dollars" all while saying it carries "little financial risk for Fox's parent company, the News Corporation, even if it disappoints."
The lack of risk is apparently due to the reliance on outside investors and help from a network of allied companies and in-house business units. Cieply refers to this as "shifting industry economics."
Next Cieply begins to dig into just how the film could potentially be seen as profitable, referencing "published reports" citing a budget of $230 million and then adding, "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."
Cieply says at what point the various partners in Avatar would see profit from the film depends on what share of revenue each receives as the movie reaches theaters, then home video and other media around the world. He seems to believe that should the film hit $250 million "Fox and its allies would appear to be headed into the black." Of course, I am entirely confused as to how a film is considered profitable. Don't the theaters earn at least a little bit of that money? It has to be more than $20 million even if we are going to work with the smallest of budgetary numbers doesn't it?
Moving beyond such matters, it is interesting to learn Dune Entertainment and Ingenious Media picked up 60-percent of the budget for Avatar according to anonymous sources. And even more interesting is the report that if final production costs exceeded $300 million Cameron would effectively defer much of his payout until the studio and others were compensated, despite upwards of 15 years of his labor on the movie.
Fox's biggest investment is said to be in an estimated $150 million worldwide marketing plan. Many may have recently seen the preview of the Avatar trailer prior to the Cowboys-Seahawks game a week ago, that was paid for by Fox, but apparently partners are stepping in elsewhere such as the highly touted "Avatar Day" this past summer where IMAX stepped in and supported the screenings of 15-minutes of footage from the film without significant cost to the studio.
When Avatar hits theaters on December 18 it "may play in as many as 2,500 3-D theaters, while occupying almost as many conventional theaters over the holiday season. Theaters using 3-D bolster the overall box-office by commanding ticket prices perhaps 30 percent higher than those of conventional theaters."
In response to online skepticism to the first look trailer and "Avatar Day" Fox is apparently counting on what a studio exec referred to as a "secret weapon." That weapon would be Alvin and the Chipmunks: The Squeakuel opening a week later and a sequel to a $217 million earning first film and one that was made for a cost of about $60 million. It already has the support of USA Today for its marketing so perhaps things will be just fine. Right?
For the complete "New York Times" article, click here, it's rather interesting. For more on Avatar click here.
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That's an insane number, but if there's not much financial risk, then the high price tag can be very deceptive.
A little off topic, but where is "What I Watched" this week?
If they wanted to make any money from this movie they should have kept the shrowd of mystery that surrounded it until they put out a trailer. Because honestly, it looks like it's gonna be a HUGE flop to me. I'm really not all that interested at this point, and i would put myself into the "Fanboy" category. But if you'd have asked me in July what my most anticipated movie of the year was, it was Avatar by a longshot.
im not one of the people who gets upset about huge budgets, ill see this just because I need to know how this money was spent
I really think the author on N.Y. times piece is full of shit. I don't understand how a film with no incredibly expensive names would cost 500 million. In fact I have a tough time believing that it cost the 230 million that others have estimated. I hope this film will be a huge success both critically and commercially.
With all the hype surrounding this movie, it better be worth the price of admission.
It's a bit premature to say just yet how this film will play. They said the same thing about Titanic (budget too high, unknown traget audience, is it girly romance or boys disaster flick) before that was released. Look at how that played out.
So by following the 2.5 budget logic, this film needs to make 1 and a quater billion dollars to make profit!?!?!?!
The highest grossing film of all time was 100 million under that, and that had the Titanic basis to work off of, the highest grossing film which was completly original was maybe Jurassic Park (though it was based on a novel and had big stars) and that only made 900K, after that it's finding Nemo with 860K.
@EnglishGavz:
Your figures are incorrect. Titanic made 1.8 billion dollars, which adjusted for inflation might equal about 2.4 billion in today's money. Why do you consider Jurassic Park to be 'completly original' as opposed to Titanic? JP was based on a massive bestselling novel, while Titanic was an original screenplay based on a 90 year old disaster.
I haven't read the other article yet, but I do find budgets misleading when they ignore assets created during film-making as if they will cease to be used following production of that first film. New technologies developed for a film will have many uses going forward, and will save money on future films… At least that's the theory. I recall Disney's "Dinosaurs" being saddled with a huge budget, but that budget included the building of the animation facilaty needed to create the film… Something that Disney was able to use again and again afterwards. So I can see how there might be very different budgets quoted for a project like Avatar, and why all of the money doesn't need to be recouped in order for the studio to find the film profitable.
Come on, this figure is completely absurd!
$500 million in just one movie?! Even with advertising, that's asking to not make a profit.
Fox is a company that's waiting to make money with this movie (with every single movie they make, btw). If they spend half a billion dollars, what were they expecting in return? 2 cents?
There's something wrong with these numbers.
What's great about movies is no matter it it's Avatar or Paranormal, the ticket price is is same.
Also, look at the biggest budget movies of the year. They made profits.
You better hope this film makes a lot of dough because that is an insane budget
I believe that budgets are part of the public relation/hollywood accounting drama. It seems studios often high ball them (look guys with back end deals, it didn't bank), or low ball them (look everybody this is a successful, moneymaking film!) Sometimes it's obvious that the "production budget" must include some of the marketing. Commenter AJD also points out a common practice. Is your movie banking? Buy new cars or other assets you can use later for the whole studio. Just as movies often get the rating their creators want, movies get the budget that will best serve whatever interest is paramount at the studio.
I don't disagree with how Hollywood handles these things. The studios would be out of business if everyone knew all the exact numbers and consequently how much they could sqeeze the studios for.
I imagine (speculation) that the larger estimates include the total cost to develop the various new technologies used. Tech that will then be used to make many, many more movies over its useful lifetime. Just an accounting numbers game. If it makes Titanic money, the costs will be front loaded.
A repeat of the Superman Returns incident in my opinion. So much spent on the movie and tons of other things about it with nothing near the payoff they wanted…391 Million Dollar Failure.
Yeah, I feel Avatar will be a good movie but a major bust at the box office considering it's length (though I love longer movies) and all the december competition it will be facing. I just cant see it succeeding.
Well I fell guaranteed that this movie will make it's money back but will also have to rely heavily on the mouth publicity too like Titanic did. Then only I think this movie will be able to make it's money back as far as I see that will happen because it's James Cameron' movie no matter what people will say now they will change their opinion once they see the movie in 3d imax that for sure.