Avatar: Product Development in Creative Industries
(8 pages of text)
Case (Pub Mat)
In 2007, Twentieth Century Fox faced a number of issues in the production of Avatar—a movie that was widely anticipated but had raised concerns in the production studios. Studio executives doubted the appeal of the plot and worried that audiences would not like the story. The movie needed to create an emotional appeal to attract audiences and make sufficient box office receipts. If the movie could not do this, Avatar would become one of the biggest money losers in the history of the movie industry. The project encountered many challenges in development—particularly in terms of time, budget, and technology, and the decision about whether to continue to invest or to pull the plug was extremely difficult. At what point did the risk become too significant? How should the studio decide when to go forward with a project and when to cancel it?
This case examines financial risk challenges in the highly uncertain movie production industry, where most movies fail and only a small number of blockbusters win the vast majority of industry revenues. It highlights the dynamics of the movie industry, the production process, and the approval process that was put in place to reduce the risk of developing new movies. Upon completion of the case, students will be able to do the following
- Outline the design of the development process in an extremely uncertain creative environment
- Identify the different sources and levels of uncertainty in different movie projects.
- Identify appropriate management styles and approval processes for different types of movie projects (e.g., original creative products versus sequels and tie-ins).
- Assess the importance of a portfolio approach to hedging risks when developing creative products of different types (e.g., originals, sequels, and tie-ins).
Arts, Entertainment, Sports and Recreation
United States, Large, 2019
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