Inside a dark mixing stage at 20th Century Fox a few weeks ago, writer-director James Cameron, surrounded by nearly a dozen colleagues, stared at a clip from his upcoming movie, "Avatar," unhappy with the look of the precipitous peaks on the horizon.
Circling the summits with a red laser pointer and speaking to his computer-effects team at Weta Digital in New Zealand via videoconference, Cameron came up with a Muhammad-like solution: Shift the mountains to the left.
"Moving a mountain," the 55-year-old filmmaker said, laughing, "is nothing."
Such bravado might be expected from the man who declared, "I'm the king of the world!" during the Academy Awards 11 years ago, when his last feature film, "Titanic," collected 11 Oscars. It was the highest-grossing movie in cinema history.
Throughout his career, in films such as "Terminator 2: Judgment Day" and "The Abyss," Cameron has used eye-popping digital effects to create worlds and characters. But he never has attempted anything as creatively and commercially ambitious as "Avatar," a groundbreaking combination of 3-D filmmaking, photo-realistic computer animation and live-action drama that opens Dec. 18.
"Avatar," a futuristic thriller, may be Hollywood's most expensive movie ever, and many in the industry fervently hope it will transform 21st century moviemaking the way sound and color did decades ago.
The film business, struggling with flat theater attendance, collapsing DVD sales and the serial firing of top executives, certainly could use a game changer -- an immersive moviegoing experience that delivers more than anyone can get from their HDTV or home computer screens. But though "Avatar" might be all that, it also defies conventional Hollywood wisdom that today's blockbuster movies need to be "pre-sold" as bestsellers ("Harry Potter," "The Lord of the Rings"), comic books ("Batman," "X-Men"), toys ("Transformers," the upcoming "Battleship") or based on other movies (every sequel ever made).
Thus the novelty of "Avatar" could also be its biggest liability. And some wonder if the film's plot -- dense with action sequences and special effects, but also featuring a love story between two 10-foot-tall blue aliens -- will resonate with a wide enough audience to steer the movie into profitability.
Hollywood has tracked "Avatar" closely. Many of Cameron's friends -- members of a filmmaking elite that includes Steven Spielberg, Peter Jackson and Ridley Scott -- made pilgrimages to his Santa Monica production house and the Playa del Rey hangars where he worked on the film.
"I was blown away," said Guillermo del Toro, director of "Pan's Labyrinth" and the upcoming "Hobbit" movies. "The creation of this technology is what allows a movie like 'Avatar' to exist."
Said Jim Gianopulos, co-chairman of Fox Filmed Entertainment: "He gets to the edge of the envelope, and then goes as far past it as possible."
To observe Cameron directing "Avatar" is to witness filmmaking as it's never been done before. Whereas most movies add all of their visual effects in post-production, Cameron was able to see fully composited shots in real time: The actors he was directing may have been performing in front of a blank green screen, but Cameron's camera eyepiece -- not to mention giant 3-D television monitors -- immediately displayed lush, synthetic backgrounds.
The filmmaker has spent the better part of a decade developing the technology used in "Avatar," which is set on a distant moon under siege by humans determined to pillage its natural resources. It required the reinvention of bulky 3-D cameras, which had to be downsized to fit into smaller spaces and move with fluidity, and lengthy experimentation with improvements in motion-capture animation, which superimposes animated characters onto real actors, as in the current Disney version of "A Christmas Carol."
As part of his research and development, Cameron directed the 3-D documentaries "Aliens of the Deep" and "Ghosts of the Abyss," which visited the Titanic's underwater wreckage. To overcome what many critics regard as the great flaw of motion-capture animation, the "dead-eye" appearance of characters, Cameron mounted tiny cameras above the faces of his "Avatar" actors, recording their smallest facial expressions and most intimate eye movements.
"What had been missing in motion capture was the 'E' -- the emotion," said "Avatar" producer Jon Landau.
The real test of this hybrid technology, the filmmakers acknowledge, will not be in the 3-D illusion of sending a rocket hurtling toward the audience, but in whether it enhances the tale's emotional resonance.
"Titanic" may have won the Oscar for visual effects, but it was the film's romance that lured millions of repeat viewers. One of Cameron's foremost challenges, then, is to ensure that the lead "Avatar" characters, played by Sam Worthington of "Terminator: Salvation" and Zoe Saldana of the most recent "Star Trek" movie, are as emotionally compelling as were Leonardo DiCaprio and Kate Winslet.
"I don't think there's any loss of emotionality or of the acting," Cameron said during a dinner break in his visual effects review. "I think we've reached the point where it looks as real as a blue humanoid character can look."
All the cutting-edge technology to get there -- along with Cameron's well-known perfectionism -- carries a cost.
With current production expenditures of $310 million (which could grow when the final budget is tallied) and a global marketing campaign that could cost as much as $150 million, "Avatar" won't have to do "Titanic" business to make money, but it will have to fill auditoriums around the world for weeks to become profitable.
"This has to be one of the highest-grossing pictures of the year to make it all worthwhile," said Doug Creutz, a media analyst with Cowen & Co.
Before Fox executives agreed to finance the film, Cameron in early 2006 showed them a four-minute "Avatar" test that convinced the studio he could pull it off.
"The revolution, the change that Jim has brought about is that for the first time the CGI-created characters have a reality and an emotionality that completely conveys the actors' performances," said Tom Rothman, co-chairman of Fox Filmed Entertainment. "That was the big leap -- that you would care about a CGI-created character."
That wasn't Cameron's only leap.
The director has broken Hollywood's most prominent budget milestones. "Terminator 2" was the first movie to cost $100 million; "Titanic," the first to hit $200 million. With "Avatar" he appears to be the first to crack $300 million.
"Avatar" joins the movie industry's expanding list of mega-budget undertakings; the most recent "Harry Potter," "Pirates of the Caribbean" and "Spider-Man" movies each cost at least $250 million. But unlike those sequels, there's no "pre-awareness" hook, which studio executives increasingly rely on.
To mitigate its risk, Fox took on outside financial partners -- two investor groups from Dune Capital Management and one from Ingenious Film Partners -- which are paying for about two-thirds of the production costs, according to people familiar with the deals. Fox will also get a 15% tax rebate from New Zealand, where all the live-action sequences and most of the effects were done, expected to be between $25 million and $30 million.
Cameron agreed to delay his profit participation until Fox and its investors recoup their costs. Fox will first pocket a double-digit distribution fee for releasing the movie and recover all of its marketing expenses. "Avatar" also will benefit from the higher ticket prices charged by 3-D theaters.
In interviews at Fox's Century City studio, Rothman and Gianopulos, who run the most cost-obsessed operation in Hollywood, said they are comfortable with the movie's economics.
"It's a creatively ambitious movie that is fiscally prudent," said Rothman. "And when you can move the popular culture, particularly with something newly created, historically speaking, that's a path to tremendous success."
"When we take on a movie of this scale," added Gianopulos, "we do it with a great deal of confidence. It would have killed me not to make it."
Fox is mounting an unusual and extensive promotional campaign, including 3-D glasses made from recycled Coke Zero bottles and a 3-D video game from Unisoft. The studio began screening "Avatar" clips last summer, first to European exhibitors at a festival in Amsterdam, then at San Diego's Comic-Con.
In August, the studio declared "Avatar Day," showing 16 minutes of the movie for free at 130 IMAX theaters around the globe, seen by 50,000 to 60,000 people, according to Fox estimates. Initial fanboy reaction wasn't all positive. "If Cameron thinks a film that looks like an Xbox game is the future of cinema . . . then he's mental," said one Web critic.
"I thought anyone who saw the early footage would be a convert," Cameron said of the IMAX previews. "It just seemed that everyone who had seen the footage wanted more."
In one promising sign, at least, early ticket sales to some large-format IMAX screens, particularly in London, have been running at a record pace.
Moreover, Fox can take comfort in the fact that the release of Cameron's "Titanic" was preceded by a yearlong wave of negative press and skepticism. Then it earned $1.8 billion at the box office.
Rothman was at Fox when Cameron made "Titanic," and hanging on his office wall is a present from the director: a child's life preserver with the inscription, "From a fellow survivor."