I haven’t decided whether I’ll see Avatar, James Cameron’s big, dumb 3D CGI cinematic spectacle. I like action/adventure films as long as they’re not incredibly violent. And I’ve liked Cameron’s films in the past. Although I thought that Titanic was big and dumb and indulgent, I recognized that it was a significant achievement in realizing a vision of past events. Avatar goes farther than that in realizing an entire world and, apparently, in indulgence. I enjoyed Terminator, and I liked The Abyss a lot.
I’ve been following Avatar’s box office performance pretty closely and it’s raised a question for me. Is it possible to make a picture that’s expensive enough that its simple economics precludes it from making any money? Avatar reportedly cost something like a half billion dollars to make. Its two week gross is roughly $213 million domestic and reportedly something like $410 million internationally. I’m a little suspicious of the reported overseas grosses.
Those are grosses and that’s still a long, long way from making any money. My guesses is that to realize a profit the picture will need to gross several billion dollars. Can it do it? For it to do that it would need to shatter previous box office gross records.
Lord of the Rings: Return of the King had a production budget of $96 million and gross earnings of $1.119 billion. I see no way that Avatar can be as profitable as LOTR and I wonder whether it will make money at all.
In this case it may come down to the DVD market, which I think is a fading market though not dead yet. Not sure how the economics of downloads shake out for movies.
Sure, it’s easy to make a movie that’s too expensive to make a profit. It happens all the time at much lower numbers. You have X number of potential ticket buyers spending Y dollars, so if your cost is larger than Y you’re going to fail. Y isn’t an infinitely expandable number, whereas there’s almost no limit to what you can spend on a movie. (Just imagine Avatar with Tom Cruise as the male lead and Angelina Jolie as a love interest. They both take cuts of gross.)
Of course, given Hollywood, your failure will be rewarded with more and larger movie deals. Because that’s the way they roll.
I guess I’m wondering whether Avatar isn’t more than just a CGI Heaven’s Gate. I wonder whether there’s an absolutely highest production budget for a movie (adjusted for inflation, of course) over which any movie will not make any money and Avator has run up against that ceiling.
The production budget for Avatar is $250 million. Marketing expenses for this are something I’d estimate to be $50 million. In the first two weeks of ticket sales, the movie theaters don’t make any money off the tickets, so 100% of that goes to production.
I’m not at all surprised by the overseas grosses, as they’re in line with other major blockbusters for the past two years.
My guess is that Avatar will be turning a profit next week. I don’t know why you’re assuming several billion.
Alex:
Studios sometimes understate their expenses in the media. Although later they’ll inflate them of course.
Don’t forget Cameron’s piece which must be a good 20% of gross, not profit. No other above the line talent though, so that’s good from the profit point of view.
Michael,
All the pre-opening “Avatar’s gonna flop” articles had the budget at $250mil. The official line was $200M. Cameron put up a significant amount of the cash so he isn’t getting a normal piece of the gross–he gets a partnership share, so we’re looking at profits for him.
General rule of thumb for a blockbuster is that once you’ve doubled the budget+marketing (in this case, around $300 million), you’re usually starting to turn a profit. Given the lack of big names, I’d say that’s a good thumb rule for Avatar.
Alex:
Have you seen it yet, by the way? I’m resisting and I don’t quite know why, except that I abhor anything that involves a moral lecture.
Saw Holmes. Meh. Love Downey, but still meh.
Waiting for Iron Man 2.
The lines of “good” vs “evil” are drawn so thick in the movie that they can be seen from outer space, but it actually didn’t bother me that much. It’s offset by the gorgeous imagery, plus good characterization and acting by Sam Worthington, Zoe Saldana, Sigourney Weaver, and the guy who plays the “Colonel” character.
Michael,
I’ve been resisting it, too. I don’t mind knowing the ending of a movie before I go to see it, but I do mind knowing the middle. It looks bland and safe to me.
Haven’t seen Holmes yet, but I did catch Up in the Air a couple of weekends ago, which is absolutely phenomonal. I normally disdain plotless character pieces, but my wife dragged me to Up in the Air and I was just floored by how good it was.
I also can’t wait for Iron Man 2, but I REALLY can’t wait for Inception, even though I have no idea what it’s about. If Christopher Nolan directed an adaption of the Yellow Pages, I’d be there, though.