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Hollywood hopes for a game changer in 'Avatar'

November 15, 2009|John Horn and Claudia Eller

"I don't think there's any loss of emotionality or of the acting," Cameron said during a dinner break in his visual effects review. "I think we've reached the point where it looks as real as a blue humanoid character can look."

All the cutting-edge technology to get there -- along with Cameron's well-known perfectionism -- carries a cost.

With current production expenditures of $310 million (which could grow when the final budget is tallied) and a global marketing campaign that could cost as much as $150 million, "Avatar" won't have to do "Titanic" business to make money, but it will have to fill auditoriums around the world for weeks to become profitable.

"This has to be one of the highest-grossing pictures of the year to make it all worthwhile," said Doug Creutz, a media analyst with Cowen & Co.

Before Fox executives agreed to finance the film, Cameron in early 2006 showed them a four-minute "Avatar" test that convinced the studio he could pull it off.

For The Record
Los Angeles Times Monday, November 16, 2009 Home Edition Main News Part A Page 4 National Desk 1 inches; 25 words Type of Material: Correction
'Avatar': An article in Sunday's Section A on director James Cameron's upcoming movie "Avatar" referred to video game maker Unisoft. The company's name is Ubisoft.
For The Record
Los Angeles Times Sunday, November 22, 2009 Home Edition Main News Part A Page 4 National Desk 1 inches; 23 words Type of Material: Correction
'Avatar': An article in the Nov. 15 Section A on director James Cameron's upcoming movie "Avatar" misidentified video game maker Ubisoft as Unisoft.

"The revolution, the change that Jim has brought about is that for the first time the CGI-created characters have a reality and an emotionality that completely conveys the actors' performances," said Tom Rothman, co-chairman of Fox Filmed Entertainment. "That was the big leap -- that you would care about a CGI-created character."

That wasn't Cameron's only leap.

The director has broken Hollywood's most prominent budget milestones. "Terminator 2" was the first movie to cost $100 million; "Titanic," the first to hit $200 million. With "Avatar" he appears to be the first to crack $300 million.

"Avatar" joins the movie industry's expanding list of mega-budget undertakings; the most recent "Harry Potter," "Pirates of the Caribbean" and "Spider-Man" movies each cost at least $250 million. But unlike those sequels, there's no "pre-awareness" hook, which studio executives increasingly rely on.

To mitigate its risk, Fox took on outside financial partners -- two investor groups from Dune Capital Management and one from Ingenious Film Partners -- which are paying for about two-thirds of the production costs, according to people familiar with the deals. Fox will also get a 15% tax rebate from New Zealand, where all the live-action sequences and most of the effects were done, expected to be between $25 million and $30 million.

Cameron agreed to delay his profit participation until Fox and its investors recoup their costs. Fox will first pocket a double-digit distribution fee for releasing the movie and recover all of its marketing expenses. "Avatar" also will benefit from the higher ticket prices charged by 3-D theaters.

In interviews at Fox's Century City studio, Rothman and Gianopulos, who run the most cost-obsessed operation in Hollywood, said they are comfortable with the movie's economics.

"It's a creatively ambitious movie that is fiscally prudent," said Rothman. "And when you can move the popular culture, particularly with something newly created, historically speaking, that's a path to tremendous success."

"When we take on a movie of this scale," added Gianopulos, "we do it with a great deal of confidence. It would have killed me not to make it."

Fox is mounting an unusual and extensive promotional campaign, including 3-D glasses made from recycled Coke Zero bottles and a 3-D video game from Unisoft. The studio began screening "Avatar" clips last summer, first to European exhibitors at a festival in Amsterdam, then at San Diego's Comic-Con.

In August, the studio declared "Avatar Day," showing 16 minutes of the movie for free at 130 IMAX theaters around the globe, seen by 50,000 to 60,000 people, according to Fox estimates. Initial fanboy reaction wasn't all positive. "If Cameron thinks a film that looks like an Xbox game is the future of cinema . . . then he's mental," said one Web critic.

"I thought anyone who saw the early footage would be a convert," Cameron said of the IMAX previews. "It just seemed that everyone who had seen the footage wanted more."

In one promising sign, at least, early ticket sales to some large-format IMAX screens, particularly in London, have been running at a record pace.

Moreover, Fox can take comfort in the fact that the release of Cameron's "Titanic" was preceded by a yearlong wave of negative press and skepticism. Then it earned $1.8 billion at the box office.

Rothman was at Fox when Cameron made "Titanic," and hanging on his office wall is a present from the director: a child's life preserver with the inscription, "From a fellow survivor."

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john.horn@latimes.com

claudia.eller@latimes.com

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