James Cameron's last two movie releases both went on to become the highest-grossing movie of all time, but thanks to a massive budget for Avatar: The Way Of Water, there's concerns about the movie's ability to turn a profit. It may be a sequel to the highest-grossing movie of all time, but arriving 13 years later in a post-COVID box office environment, can Avatar 2 actually earn enough money at the box office to break even?

According to Cameron, Avatar: The Way of Water needs to break box office records in order to recoup its budget. It makes sense for the sequel to the highest-grossing movie of all time to get an increased budget, but could Cameron and Disney have over-committed by making Avatar 2 so expensive? Fortunately, Cameron has proven his ability at the box office, and the movie's inflated budget may not be as extreme as it appears.

Avatar 2's Box Office Potential is Hotly Debated


Even though the first Avatar is the highest-grossing movie of all time, the potential for Avatar: The Way of Water to see a similar box office performance has always been hotly contested. Not only is it arriving nearly a decade and a half after the first movie, but the 3D technology that made Avatar so popular is hardly as novel anymore. Additionally, most of the other box office performers are based on popular IP like Marvel, Star Wars, or Jurassic Park, and while Avatar: The Way of Water is a sequel, it's not based on a property that has as much brand momentum compared to other popular franchises.

While these concerns are understandable, the existence of a cultural discourse surrounding whether or not Avatar is culturally relevant is a question that mostly answers itself. When it comes to brand recognition, Avatar may have had any movies are shows released since the original movie, but the Na'vi and other brand elements are arguably more universally recognizable to general audiences than other IP being adapted by Marvel and DC recently such as Black Adam or Captain Marvel.

Avatar 2 Needs to Be One of the Highest Grossing Movies of All Time To Make a Profit


James Cameron has a record of making expensive movies, setting the record of most expensive movie of all time with Terminator 2: Judgment Day in 1991, breaking that record with True Lies in 1994, which was the first movie to cost more than $100 million to make. Cameron turned around and broke that record again with his next movie, Titanic in 1998, which was the first movie to cost more than $200 million. It's not uncommon for Hollywood blockbusters to cost well north of $200 million these days, but Cameron is raising the bar again with Avatar: The Way of Water, which reportedly cost between 350 to $400 million to make.

Thanks to Avatar 2's huge price tag, after factoring in marketing, profit sharing with theaters, and other expenses, Avatar: The Way of Water needs an astronomical box office run in order to turn a profit, with Cameron himself calling it “the worst business case in movie history.” While it doesn't have to make quite as much as the first movie, Cameron says "You have to be the third or fourth highest-grossing film in history. That’s your threshold. That’s your break even."

Avatar 2's Expensive Budget May Be Misleading


Part of the reason Avatar: The Way of Water is so expensive is because of the amount of new technology developed to bring the movie to life. The first movie revolutionized 3D technology and computer-generated VFX, but that was 13 years ago and Cameron's ambition for the sequel meant even more VFX technology development was needed to make it happen the way he wanted, particularly the water elements.

Despite the high price tag, Avatar 2's profitability situation may not be as black and white as it appears. It's important to remember Disney greenlit four Avatar sequels with a combined budget of $1 billion. Unlike the gap between Avatar and Avatar: The Way of Water, Avatar 3, titled Avatar: The Seed Bearer, is already in production, meaning the overhead costs associated with developing this new technology are being at least partially absorbed by Avatar: The Way of Water, meaning Avatar: The Seed Bearer may have a much easier path to profitability.

Regardless, both movies (and Avatar 4 and Avatar 5, if they happen) still need to be among the highest-grossing movies in history to turn a profit, but James Cameron's dramatic description of the movie's "business case" may come with an air of theatricality. After all, while $350 to $400 million is a lot of money to spend on a movie, after adjusting for inflation, Titanic's $200 million budget is almost $370 million in 2022 dollars, and most of the expensive blockbusters of the last decade fall into that range.

Trust James Cameron When it Comes to Budgets and Box Office


If there's two things James Cameron has proven throughout his career, it's his budgets and box office. Cameron cut his teeth with low-budget film production at Roger Corman Studios and designed The Terminator's screenplay to work with a super low $6.4 million budget so he could use it as leverage to convince a studio to let him direct it. It went on to earn nearly $80 million at the box office, making it massively popular. Despite the low budget of the first movie, the box office performance gave Cameron the clout he needed to design a much bigger movie in the sequel, and he's pushed boundaries with budgets ever since.

Every time there's news about Cameron's movies being super expensive and over budget it spawns hand wringing and concern over the movie's ability to turn a profit, and while these concerns should always be present when so much money is being spent, Cameron's success rate doesn't give any reason to doubt. Terminator 2: Judgment Day, True Lies, Titanic, and Avatar all raised eyebrows with their big price tags, but True Lies' $378.9 million box office haul is the smallest of the group, while Avatar and Titanic are still the number one and number three highest grossing movies of all time.

Another major impact is the Chinese box office. Unlike most other big box office hits of the last few years, Avatar: The Way of Water is actually getting a release in China, where the original movie got a sizable chunk of its box office. A 2021 Chinese re-release of Avatar earned $57 million, showing just how much potential the franchise has internationally. Additionally, the recent Avatar re-release in September earned another $75 million, so it's definitely far too soon to start discounting the potential profitability of Avatar: The Way of Water.