Leave it to James Cameron to best his own record and make his latest Opus the highest-grossing film ever.
Monday night "Avatar" is on track to surpass Titanic's $1.842 billion box office record from 1997 and 1998. Yes, "Avatar's" box office isn't adjusted for inflation. And yes, it's worth noting that 3-D tickets sell for an average of $3 more than typical 2-D movie tickets. Yet even with those advantages Avatar's success is huge. While "Titanic" was in theaters for a whopping 41 weeks before it hit that record-breaking box office, "Avatar" has only been in theaters for six weekends.
"Avatar" was one of the most expensive movies ever made — costing about $300 million to produce, plus at least $150 million more for global marketing and distribution. Fox shared some of the production costs with investors Dune Capital and Ingenious Film partners. But the film went over budget and took longer than expected. So this huge success means News Corp can breathe a big sigh of relief and break out the champagne. Not only will Fox reap the benefits from ticket and DVD sales, there are also licensing fees down the road, not to mention sequels.
Of course James Cameron will be bringing home a pretty penny from the film. He invested in new technologies for the film, an investment that's already paid off as he's licensed the 3-D cameras to other filmmakers like Steven Spielberg and Peter Jackson. Big name directors like Cameron can bring home 15% of a studio's gross on a film, which means Cameron's payday would be hundreds of millions of dollars. Because the film went over budget, Cameron is likely deferring his take from the film until after the studio recoups its costs.
Whether or not Cameron has to wait to collect his Avatar goldmine, this is only the beginning. When I sat down with Cameron before the movie opened, he explained why sequels should be far more profitable than the original film, and faster and easier to produce. Fox invested big money and Cameron invested years to create a virtual world. Rendering the characters and landscape was expensive and time consuming, but now they all exist on a hard drive, and it'll be a lot easier to put all those ones and zeros to work.
Let's not forget that awards season could give Avatar another boost. After winning big at the Golden Globes Avatar is well positioned to snag an Oscar nomination for best picture. And more awards attention means even more box office gold.
While movies that perform well in 3-D in theaters tend not to sell as many DVDs as their 2-D counterparts, Avatar could very well buck that trend. With electronics makers (SNE, PC) pushing 3-D enabled televisions, a 3-D Avatar DVD could make a new kind of record.
Update: BMO analyst Jeffrey Logsdon walked me through his estimates for Avatar's profitability. He projects the movie will end up grossing $650 million at the US box office and $1.95 billion total. Once the studio gives the movie theaters their take Fox gets about $942 million. Logsdon estimates that home video is worth another $420 million in revenue, and interactive games should bring in some $70 million more. All in, he says the studio's revenues are north of $1.56 billion. Logsdon is guessing Cameron gets about 20% of those revenues, giving him $325 million. Subtracting $475 million in production and distribution costs the studio's (and its investors) net profit from the film is some $700 million.
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