Deadline’s Most Valuable Blockbuster tournament took a hiatus during the pandemic as movie theaters closed for the majority of 2020-2021 and theatrical day-and-date titles on both the big screen and studios’ respective streaming platforms became more prevalent. Coming back from that brink, the studios have largely returned to their theatrical release models and the downstream monies they can bring. Not to mention their power in launching IPs around the world with big global marketing campaigns. When it comes to evaluating the financial performance of top movies, it isn’t about what a film grosses at the box office. The true tale is told when production budgets, P&A, talent participations and other costs collide with box office grosses, and ancillary revenues from VOD to DVD and TV. To get close to that mysterious end of the equation, Deadline is repeating our Most Valuable Blockbuster tournament for 2022, using data culled by seasoned and trusted sources.
THE FILM
Avatar: The Way of Water
20th Century Studios/TSG/Lightstorm/Disney
Total Profit: $531.7M
It should come as no surprise that James Cameron’s Avatar: The Way of Water has won Deadline’s Most Valuable Movie Blockbuster Tournament for 2022. At the global box office, it beat Paramount/Skydance/New Republic’s Top Gun: Maverick, $2.3 billion to $1.49 billion. Jump to the Bottom Line for further explanation of the numbers.
First, let’s behold that there never has been a production like the Avatar franchise in the history of Hollywood. Yes, there were back-to-back sequels shot for Avengers: Infinity War and Avengers: Endgame, for Back to the Future II & III, and for the sequels 2003’s Matrix Reloaded and Matrix Revolutions, but there’s never ever been four sequels made over what is expected to be a 17-year-plus span. There also has never been one that has survived a major studio merger (in Disney swallowing up 20th Century Fox) or a global pandemic that saw the yearlong shutdown of cinemas. In addition, Cameron is a rare breed, a filmmaker that not only writes, directs, and produces his movies, but edits them as well.
When Avatar 2 and its sequels were given the green light by 20th Century Fox back in 2013, realize that at that time Cameron had the top two highest-grossing movies ever with Avatar at No. 1 and Titanic at No. 2. That’s when the filmmaker’s massive deal to make these movies was negotiated.
Cameron had the novel approach of assembling a feature screenwriters’ room at Lightstorm’s then-HQ in Manhattan Beach: scribes Rick Jaffa, Amanda Silver, Josh Friedman and Shane Salerno all worked with Cameron, and all received story-by credits. Jaffa and Silver got the screenplay credits on Way of Water, but each screenwriter will land a credit per Cameron on future sequels. The writers group worked in tandem with the art and production design department, the latter taking immediate inspiration from the ideas that sprang forth from the room. The screenwriting group cracked all the scripts for the sequels before the movie officially began shooting, with the actors reading all of them so they were aware of their arcs. News Corp boss Rupert Murdoch even stopped by the Manhattan Beach studio to check out the early production process and concept images while Cameron was at work, to see where all the hundreds of millions of dollars were going.
At CinemaCon 2016, Cameron announced he was expanding the sequels from three to four; that epiphany came out of the writers’ room, with each sequel doting on different worlds, i.e., ocean in Avatar: The Way of Water, a fire world in part 3, and and Earth-bound sequel in Avatar 5.
Performance capture of the actors began in September 2017 for the first two sequels. There was a live-action shoot in late 2019, but that was interrupted by Covid in March 2020, at which point the production went down for eight weeks. When Disney absorbed 20th Century Fox, sources tell Deadline it was Bob Iger who was Cameron’s point person on the further production (Cameron really doesn’t take production notes).
THE BOX SCORE
THE BOTTOM LINE
Cameron told GQ that Avatar: The Way of Water “was the worst business case in movie history,” in that it would need to be “third or fourth highest-grossing film in history” to reach break-even.
As the third highest-grossing movie of all time with $2.3 billion, behind Avatar‘s $2.9 billion and Avengers: Endgame‘s $2.79 billion, Deadline sources deem Avatar: The Way of Water profitable with $531.7 million. And that doesn’t include the ancillary revenue from Avatar‘s presence at Disney theme parks, which the conglom also counts on its books.
Cameron also clarified his GQ break-even statements on an episode of Who’s Talking to Chris Wallace, saying, “I never actually gave it a number. I said it would have to be among the highest-grossing films in history and somebody else applied that number and it got picked up. The number is actually less.”
He was confident the pic’s success would encourage Disney to commit to the sequels he had in the works over the next six to seven years.
Avatar: The Way of Water‘s opening was nothing to ding, though it was lower than many Marvel films and slow out of the gate. Initial projections had the pic at $500M worldwide (it opened at $441.7M globally) and domestic between $150M-$175M (the movie opened at $134.1M in the U.S. and Canada). Some of that had to do with moviegoers scheduling their viewing of the 3-hour, 12-minute film in premium 3D, i.e., Imax and Dolby, which had limited number of seats. If anything, Avatar: The Way of Water proved that exhibition needs more premium screen formats to expand the moviegoing audience. Avatar: The Way of Water‘s second weekend was impacted by harsh winter weather, but the movie legged out as Cameron pictures typically do, with the sequel finaling at $683M U.S., $1.6B overseas (including a massive $246M in China, one of the few U.S. pics to truly break out since the Middle Kingdom has squashed American movies’ box office potential) and $2.3 billion worldwide. Realize that sum is without Russia, a territory in which the first Avatar grossed $116M.
There have been wild rumors out there about the production cost for Avatar: The Way of Water, some suggesting $700M net. However, backing out the amount of money it cost to shoot concurrently future sequels during Avatar: The Way of Water‘s production schedule, our sources believe the net production cost is $400M solely for Avatar: Way of Water including New Zealand tax credits. TSG co-financed Avatar: The Way of Water at 25% with spending caps, according to those in the know. Note, during the production of Way of Water, Cameron had to shoot younger castmembers who were aging out (for example, Trinity Jo-Li Bliss, who plays Tuk, who was 7 when cast and is now 13, and Jack Champion, who was 12 when cast as Spider, but is now 18). Because Champion was “growing like a weed,” per Cameron, the second, third and first act of the fourth movie had to be done in one production.
No filmmaker in the history of Hollywood has had three movies among the top 20 highest-grossing movies of all time, let alone the top 10. Not even Steven Spielberg as a director (you have to go to Jurassic Park at No. 32 with $1.1 billion). Cameron now has three of the top four. What do you pay a filmmaker like that? A payout that’s beyond normal. Sources tell us that a bulk of $300M in the Participations line goes to Cameron and producer Jon Landau. Cameron’s deal is believed to be 20% of first-dollar with escalations that get him to 50%. The actors, we hear, received crazy up-fronts in lieu of back-ends. Cameron received a reported $350M alone for Avatar, but that’s when home entertainment was high (only $150M worldwide revenues are expected here for Avatar 2 despite high Premium VOD rates). Global streaming and TV, which includes a double play on both Disney+ and HBO in the pay one window, is pegged at $200M. Theatrical marketing of $175M doesn’t include the $170M worldwide from promotional partners including Mercedes-Benz. The $1.26 billion in theatrical rentals is factored off, per sources, 25% of China’s box office, 55% average for the rest of the world, and 65% for domestic. Why so high for the latter? Because Disney was able to demand high terms from exhibition as this was the only tentpole in theaters for a three-month stretch before Ant-Man and the Wasp: Quantumania opened over Presidents Day weekend.
Avatar 3 is scheduled to open December 20, 2024, with the fourth movie set for December 18, 2026. Avatar 5 is scheduled for December 22, 2028.