Should Studios Adopt the James Cameron Model of Moviemaking?

Not to belabor a point, but since Avatar is 3-D, it is not at all a given that DVD/Blu-Ray sales will be equally phenominal. I've seen no statistics on repeat viewage and I have heard it described as, "A good movie to see, once."

Very well thought out. I wish you had been as thorough in your explanation previously, but I assume that you had already planned on lengthening out your articles over time. I see your point now and I respect your position. I think though that if every studio always took the safe bet then we would have few interesting movies, and no ground breaking advancements in movie making. I understand that you may have no interest in seeing the movie from a content perspective. I feel that you should view the movie you are commenting about though so you can see for yourself what they have managed to achieve in the visual effects of this film.

@Dan: Avatar is also available in standard 2D in theaters without 3D. So when it arrives on DVD/Bluray it will be just as easily available in both 2D and 3D. Having seen it in both formats I can tell you that while the 2D version is not as engrossing as the 3D version. It is still a visual experience unlike any movie I had seen previous to it. I can only compare it to seeing Jurassic Park for the first time and remembering how real the dinosaurs looked on the screen.

Surely the fact that 20th Century Fox's avoidance of the use of big name "Hollywood actors" on Avatar - should be factored into an assumption about any film's profit yield.

After all - it's the story that inspires the making of a movie not actors arcane expenses.

to the author: how can you write about something at the same time as saying you have no interest in it, and expect people to understand/believe you? It's like saying Walmart is good or bad, but I will never go or shop there. I'd have more confidence in your message if you saw the movie... please experience what you talk about.

Perhaps the risk / reward is not there for the studios in just the film, but there are another important aspects they are pushing: 3D and IMAX.
It is critical for Hollywood to push 3D and IMAX into the marketplace as quickly as possible. It is becoming easier and less expensive for people to replicate the theater experience at home. 3D and IMAX provide a distinct differentiator that you can not get at home. This value add helps to drive people to the theaters.
I believe that they are using Avatar as a vehicle to push 3D and IMAX, similar to the Matrix and the migratation to DVD.

You might consider actually watching a movie if you are going to write an article about it. I'm not a journalist, but that would seem to be "common sense."

Given the potential windfall from Avatar's DVD/Bluray, DD, VOD, B&M rentals, pay-cable and broadcast network/syndicated television releases, its understandable why Newscorp would undertake such a risky investment.

I doubt that potential could be replicated by a 50 million dollar film that produced 100 million in theater profits. Higher risks often come with the prospect of bigger returns.

Furthermore, risk isn't simply determined by the amount invested. In other words, investing $10,000 with your next door neighbor, who's a domino delivery man by day and investment guru by night, isn't less risky then investing $100,000 with Warren Buffet simply because $10,000 is alot less than $100,000. Cameron has a history of being involved with huge revenue generating films or franchises. $500 million in Cameron's hand is a safer bet than $50-$200 million in hands of the majority of the hollywood directors.

Concerning the cost and risk of an Avatar sequel, one thing not mentioned is that all the technological hurdles that added to the cost of Avatar now simply exist and sit there ready to be used. The new 3D camera system, the new motion capture face cameras, the simulcam for combining real and virtual realtime filming, none of these need to be reinvented for a sequel. The massive number of CG plants and set pieces and CG animals we saw that make up Pandora? Ready and sitting on the hard drives at Weta (collecting virtual dust until used again). Same goes for the complex facial rigs made in Maya that we hear took 9-12 months to perfect for each actor. I'm sure Sam Worthington could get back into the mocap-dot suit and in very short time they could have some new production ready footage if they wanted. Doesn't this alone make a sequel less costly and thus less risky?

I feel like the one thing that is being ignored is how much the investment in technology here will defray costs in later movies. While, let's say, a movie like "The Blind Side" may bring in a profit similar to "Avatar" on a smaller investments, nothing in "The Blind Side" can be reused. i'd be positive that the innovations necessary for "Avatar" will be reused on later films. Thus, it would make sense that "Avatar" has a greater value than a smaller film. just a thought

This response is rushed, is not organized, and there are probably grammar mistakes. Apologies in advance.

I am a writer, my stock-in-trade is creativity, and since you seem to not understand that moviemaking is first and foremost an artistic medium, I feel compelled to comment.

“…I believe it is important for shareholders in media companies to put pressure on content businesses to watch the bottom line and not get too caught up in the Hollywood machine of overspending for the sake of being associated with the glitz and glamor of the L.A. celebrity culture."

I don’t even know where to begin with the above quote. You’re probably the kind of writer who bandies about the catchprhase: “Content is king.” It sure is when you’re dealing with Youtube, et al… when you’re dealing with insane movie gambles, TALENT is what you're betting on. That’s why Newscorp et al were willing to gamble on the insane vision of a guy like Cameron not once but twice. And it paid off.

Granted, movies have to make money, but reducing them to content, e.g. something to fill a blank space on a production slate usually equals a shitty film, and yes, bad box office reciepts. Studios "overspending" has fuck-all to do with celebrity culture-- it usually has to do with marketing costs that rise out of covering a bet so huge that it could sink the studio. These ever-spiraling marketing costs usually become the raison d’etre for studios taking zero risks, and because of this, it takes much more box-office $$$ for said film to see profit. So the conceptual risks go down, marketing costs spiral out of control, and culture suffers as a result. The good news is that this process is unsustainable, and will keep burning down studios until they figure out it's about the QUALITY OF THE FILM, FIRST AND FOREMOST. Get me?

Movies are generally a terrible investment. But you know why XYZ corporation, or XYZ tycoon gets into the game? Because THEY’RE THE ONES who want to have their pictures taken with Brad Pitt. Or go to a red carpet premiere. Or blow coke with some starlet. NOT the “content businesses (I assume you mean studios).” Let’s take XYZ tycoon. He made a ton of money in say, real estate, and thinks that he can take his very-successful, very sane business model to Hollywood. Hollywood is littered with the corpses of monied douchebags who thought it only took money, not a knowledge of the filmmaking process (God forbid!), to get in the game. Now some parent corporation, they’ll try to control as much of the creative process as they can, eventually get annoyed, and chafe at the vicissitudes of the creative process, and then divest their shares, such as GE slowly is doing now. Good for them. I think they should stick to selling microwaves.

Point? The vertically-oriented structure of investor-driven parent companies owning studios does not work, and guys like Cameron make their films despite this arrangement, not because of it.

Re: Disney. “Remember when the studio came up with Pearl Harbor back in 2001? Arguably, that was an attempt at replicating the success of Titanic.”

Yeah, know why the movie failed? Because it SUCKED. The biggest thing you don’t seem to get is that a movie has to be FANTASTIC to make blockbuster money. It has to be GROUNDBREAKING to be a cultural phenomenon. Peter Chernin, to his credit, protected Cameron during the maddening budget overages during Titanic. If it was up to Rupe, the whole thing would have been shut down before they went into post-production.

“Sure, he did well with Titanic, but was that an automatic guarantee that Avatar would turn out as well as it did?”

Did well? Did WELL? Titanic was the highest grossing movie EVER. It made over 1.8 billion dollars. The second-highest grossing movie was over 500 million dollars behind it. That wasn't a guarantee that Avatar would make money, it’s a guarantee that when Cameron sits down in your office and says “Guys. I’ve got a concept that’s going to change filmmaking forever,” you shut up, and get your wallets out.

“Another reason? Cameron himself doesn't even believe in it. How do I know this, you ask? I very much doubt he would be willing to fully fund the sequel to Avatar via his own personal bank accounts. If all his cash were on the line, then I would think there's something to his methods.”

You obviously don’t know shit about James Cameron. If you want to educate yourself, go buy the book THE FUTURIST.

“I want to reiterate: it's all about risk and reward, about cash flows, profit participation, and, ultimately, the economic value.”

Pfft. You sound like a bond company stooge. None of that happens if a movie isn’t good. How does a movie become good? By nurturing creative talent. By trusting your director. By faith. By putting DEVELOPMENT MONEY into scripts (which is something that the far-removed corporate overlords hate, and are trying to quash). Btw, allowing the parent company to micromanage a production almost always sinks a movie.

As you said, movies are a bad investment. I agree. That’s why this conglomerate-owned, slate-filling model of filmmaking is failing. In the next ten years, we’ll see it fail completely. Which is great, because it will reintroduce democratization back into the filmmaking process. Instead of making one two-hundred million dollar movie that has the potential of sinking a studio and bankrupting investors, studios will be forced to make two-hundred one-million dollar movies, allowing more chances for the cream to rise to the top, e.g. a larger diversity in product. Already, talent (auteur) driven films are being made outside the studio system, funded directly by investors that care about movies, not some line item on their balance sheet. Models like these will rise from the ashes of the current system. The very prolific independent producer Ted Hope talks all about this, and other emerging models for new film funding/distribution on his blog, Hammer to Nail. Read what he writes if you want to understand better where the movie business is going.

Oh, and I think maybe you should see Avatar, at your local IMAX theater, in 3D. How can you talk about a movie you haven't seen?

Lastly, the “James Cameron method of filmmaking,” is to extract money from usually spineless, tight-fisted executives, who forgot how awesome/extremely profitable his last movie was, make them sweat into their Armani suits while he spends it in ways they don't understand, asks for more, then delivers another awesome/extremely profitable film. Then the process repeats itself due to their replacements' amnesia/spinelessness.

End rant.

@James… Cameron may or may not move ahead with Avatar 2. But if he does, it will be to shatter the mold once again and reset all filmmaking bars set previously by him. He won’t do it unless it’s groundbreaking. He wrote the treatment for Avatar in 1995, and shelved it because reality couldn’t yet match up to his vision. I think Avatar 2 will have to present significant challenges (impossibilities) beyond what he’s accomplished now for him to move forward.

Probably james cameron knows how to make that $$$

Steven,
I'm very pleased to see a writer respond to his audience. I'm also a first time reader on this website.

With that said, you raise many good points; however, your good points are raised on flawed ground. You at first cap Avatar at $1 billion dollars, which it already is at, and you don't take into account other profits. This film could take in well over $100 million in DVDs, and it will continue to compile the DVD sales for decades to come. On top of that, after the DVD is in stores, HBO/Showtime/Starz will be shoveling cash at the doorstep of Newscorp. Even more so, this is a technological investment that Newscorp already has invested, so it has a clear edge on other studios. The amount of profit coming from Avatar is beyond calculable. You could make the argument that Avatar will increase sales in other 20th Century Fox's films.

But the biggest point you overlooked is, 20th Century isn't the only company to fund these blockbusters. They do it for a reason; they make the most money. If they didn't make more money, then they would only fund $50 million dollar projects.

Very good article -- I've written about this phenomenon myself, but from a different perspective -- how concentrating massive investment in a single project when there's a whole lot of variance on what succeeds and what fails is bad investment and business discipline.

People of all stripes depend too much on retroactive explanations for whether a movie made money or not -- you have to make decision of whether to invest in a movie before it is made almost all the time; you don't have the luxury of even waiting to see if the rough cut is good before you put down money. And even if it is good, that doesn't mean it'll be a success in line with the money you put down.

I think a more developed appreciation of randomness in investing, along with a more disciplined approach to return on equity in making movies would lead to a more devolved, lower-budget film industry, where production and distribution are handled by many different companies or outsourcing relationships, you make many cheap projects and look for surprise successes that cast a wide net.

More like the old U.S. studio system, Bollywood, Tollywood, Hong Kong back in the day and the porn industry

http://www.overthinkingit.com/2009/04/08/stoicism-the-black-swan-and-the-resurrection-of-vin-diesel/