Is the 'Avatar' Budget Approaching $500 Million?

Talking about film budgets is a tricky thing. Talking about the budget for Avatar is an even trickier thing. I recently mused about how Fox's huge gamble had caused four highly-anticipated films in China to flee from its shadow, poising the film on the precipice of a perfect storm of box office success in China that no previous film had been privy to. In doing so I invoked the ire of a good number of commenters, all of whom felt my budget-returning extrapolation from the news that Avatar is set to dominate in 80% of China's screens during its biggest blockbuster season wasn't just a wrong hypothetical, but downright ignorant.

While I still stand by the point of that post - that the hitherto unseen convergence of all the elements behind Avatar's release is going to see unprecedented box office in China - I'll concede that there is no chance that the film makes its budget back from China alone; not with the New York Times now claiming that the film's price tag is breaching the half-billion mark. As with all things budget, however, this number isn't as simple as it looks.

The $500 million is NYT's combination of the estimated $300 million it cost to actually produce the film, the approximately $150 million Fox plans to spend on global marketing alone, with the remaining $50 million being a cushion for the cumulative costs some of the film's partners have already ponied up (such as Avatar Day, whose bill was footed mostly by IMAX). However, even if their newly estimated number is accurate, that doesn't mean that Fox is on the line for the full half-billion.

The NYT goes on to estimate that as much as 60% of Avatar's production budget was funded by the combined investments of Dune Entertainment and Ingenious Media. Neither of the private equity firms have confirmed the exact amount of their fiscal claim to James Cameron's effects extravaganza, but this kind of outside behavior is nothing new in this reborn economic climate in which studios have begun to minimize their risk involved with a film by partnering with others with deep pockets. The upside to this is it allows Fox to roll the dice on an original film property starring no A-list actors in a genre that has proven, for Hollywood, largely resistant to innovation. The downside is, even if the film does gangbusters, Fox' profit reaping is diluted between itself and the aforementioned deep pockets.

That said, Fox has apparently been hedging their bet this whole time. Regardless if the film cost $300 million or $500 million, it's going to take months before its success or failure can begin to be accurately measured. That's why the studio plans on dropping the ace up their sleeve that is Alvin and the Chipmunks: The Squeakuel on Christmas Day. The previous Chipmunks outing brought Fox a sizeable $217 million box office haul in the US, with a bonus $143 million from around the world. So whether Avatar explodes out of the gate or not, a few CGI chipmunks should help bouy the studio's balance sheets until there is enough data to reflect if their gamble on what may be the most expensive movie ever made was brilliant or foolish.