AVATAR: Box Office Analysis

The long awaited 3D Sci-Fi epic film AVATAR, directed by James Cameron has finally hit the screens around the globe on 18 December 2009. In the opening weekend, the film managed to gross $77 million from approx 7000 screens in North America and an estimated $164.5 million from the rest of the world, excluding big markets Japan and China where the film will open on 23 December and 2 January, respectively.

While the opening is solid, it is far from spectacular. Before release, Fox had estimated the opening weekend gross to be around $50 million - $60 million range, which I thought was too pessimistic. A day after release, Fox again repeated their under-estimation when they reported that AVATAR was poised to collect $73 million. Fox might have been cautious because of the notoriety of the North American market which responds coldly to non-established premises with no star power despite the scale of production. Other blockbuster openings of the year like The Twilight Saga: New Moon ($143 million), Transformers: Revenge of the Fallen ($109 million) and X-men Origins: Wolverine ($85 million) were sequels belonging to highly popular franchises with devoted fan following. Even the films with the all-time highest grossing opening weekends like The Dark Knight ($158 million) and Spider-man 3 ($151 million) were in that league. AVATAR, as we know has a non-established premise created by writer-director James Cameron. No wonder Fox was on back foot. Incidentally, AVATAR's figures are the best ever for a non-sequel film.

Fox's conservative projection may also be a trick so as to bestow the tag "exceeding studio expectations" to AVATAR. They played a similar game with the film's budget. The New York Times set the rumour bells ringing loud in November when they reported that AVATAR has "a price tag approaching $500 million". The Wrap in December quoted a Fox spokesperson as saying that the budget for AVATAR "is $237 million, with $150 million for promotion, end of story." Even to this day, there is no clarity on the actual budget of the film which is being promoted in territories like India as the biggest film ever.

Coming back to Fox's estimate, the industry as a whole however expected a sum much more than Fox's projection. Eventually AVATAR did exceed studio expectations, but fell short of industry expectations. Other than the usual December collection pattern where blockbuster openings rarely happen, the film suffered due to the cold wave that swept the American east coast regions and parts of Europe. Fox reported a collection drop of 18% in New York City, 57% in Philadelphia and as much as 75% in Washington, DC on saturday.

AVATAR, with its excellent word-of-mouth and favourable reviews will withstand any cold wave and will be collecting in the range $800 million - $1 billion worldwide. Considering that the studio nets about 50% of domestic and 40% of overseas collection, the prospects of the film in DVD market and the product/merchandise tie-ins, the sum which will leave Fox and their partners Dune Entertainment and Ingenious Media, who reportedly bore 60% of the film's cost laughing all the way to the bank. They deserve that for having faith in the King of the World.