The Way of Water needs strong second week at box office

All eyes are on “Avatar: The Way of Water’s” second week at the box office.

James Cameron’s long-awaited sequel to the highest-grossing film of all time fell short of initial box-office expectations during its debut last week. The film snared $134 million domestically, short of the $175 million that industry analysts had predicted, and just under the $135 million to $150 million range that Disney had forecast.

While “The Way of Water” tied with Warner Bros.’ “The Batman” for the fifth-highest opening of the year and nearly doubled the opening weekend of its predecessor, the softer-than-expected opening has left many box-office analysts wondering whether the film will be able to meet Cameron’s lofty goal of $2 billion at the global box office.

As of Thursday, the film had tallied more than $600 million worldwide, a little more than one-fourth of the way to Cameron’s target for profitability.

The movie’s second week will help clarify its longer-term box-office prospects. Showbiz analysts often look to the second week drop as an indicator of whether a film will have longevity at the box office or may fizzle quickly.

For most films, a 50% to 70% drop is the norm. Major tentpole features from Disney’s Marvel Cinematic Universe often see box-office ticket sales fall in this range after reaching sky-high opening weekend numbers. While those kinds of films can continue on toward billion-dollar or higher theatrical runs, this metric can indicate whether word-of-mouth is bringing new audiences to theaters or whether interest is waning.

A key example is Paramount and Skydance’s “Top Gun: Maverick” which saw ticket sales decline just 29% in its second week in theaters. The film has generated more than $1.4 billion at the global box office, and played in theaters for more than 200 days before being made available on Paramount+.

“I think ‘Avatar 2’ will continue to slay all day through the year and into the next,” said Jeff Bock, senior analyst at Exhibitor Relations. “The drop will be sizable, sure, but not like a traditional Marvel drop as Cameron’s film is really the only game in town for families for weeks, if not months.”

The next major blockbuster — Disney and Marvel’s “Ant-Man and the Wasp: Quantumania” — doesn’t hit theaters until Feb. 17, leaving “The Way of Water” a long stretch at the box office without hefty competition.

Not to mention, the days between Christmas and New Year’s eves can account for as much as 5% of the year’s total box-office receipts, according to data from Comscore. Prior to the Covid pandemic, that week averaged between $400 million and $600 million in ticket sales.

Of course, in the wake of the pandemic, the box office has been trailing 2019 levels by around 35%. Without a slew of typical holiday releases, the final stretch of the year could be significantly lower than previous years.

Compounding this is mixed word-of-mouth about “The Way of Water.” While critics have lauded Cameron’s visuals, saying that the movie needs to be seen on the biggest screen possible, a large portion have also expressed disappointment in Cameron’s script and its more than three-hour run time. Still, the movie received high marks in audience surveys, including an “A” from CinemaScore and a 93% “fresh” audience rating on Rotten Tomatoes.

Still, few in the industry are betting against Cameron. The filmmaker has a history of long-running hits at the box office, including the original “Avatar” (2009) and “Titanic” (1997).

“This second weekend has long been destined for deflated numbers due to Christmas Eve, but that’s why it’s so critical to view the film’s run based on the strength of weekdays and weekends combined over the long holiday corridor,” said Shawn Robbins, chief analyst at BoxOffice.com. “There have been a number of pre-determined headlines about this sequel for years, but let’s wait and reserve judgment based on what the global numbers tell us over the next couple of weeks.”

Aiding the film’s box office has been a significant push for 3D and premium format tickets, which are more expensive than traditional seats. The average ticket for “The Way of Water” is projected to be around $14.76 this weekend, according to data from EntTelligence. Meanwhile, Universal’s “Puss in Boots: The Last Wish,” Sony’s “I Wanna Dance with Somebody” and Paramount’s “Babylon” are expected to generate around $11 per ticket.

“James Cameron is no stranger to the importance of the long game when it comes to box office,” said Paul Dergarabedian, senior media analyst at Comscore. “His films [have previously relied] heavily on the currency of audience excitement building over time rather than an opening weekend pop.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Puss in Boots: The Last Wish.”