A Movie’s Budget Pops From the Screen
by Michael Cieply
LOS ANGELES — 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?
That question looms large for 20th Century Fox and its 3-D science-fiction film “Avatar,” among the most expensive movies ever. Despite many skeptics, the studio thinks it can turn a profit, in part because the film’s creator, James Cameron, was the driving force behind the studio’s immense hit “Titanic.”
But just in case box-office receipts for “Avatar” fall short, Fox has worked hard to hedge its large bet on the movie.
Despite the estimated half-billion dollars spent on its production and marketing, “Avatar” may carry surprisingly little financial risk for Fox’s parent company, the News Corporation, even if it disappoints. That is because of shifting industry economics, reliance on outside investors and help from a network of allied companies and in-house business units.
Fox’s efforts underscore how studios generally have been able to minimize their exposure at a time of blockbuster budgets — albeit at the cost of limiting their profit potential as well.
The final cost of the film has not been tallied, as Mr. Cameron, who has worked on the film 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.
Read the whole story here: http://www.nytimes.com/2009/11/09/busin … wanted=all
Share your thoughts in our discussion forums.