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As “Avatar: Fire and Ash” headed to the big screen this month, theater owners held their breath.

In an uneven year that saw two billion-dollar hits and a viral “chicken jockey” craze, but also a disastrous first quarter and a nearly 30-year-low at the October box office, the end of December was the last chance for theaters to make up ground.

But even James Cameron and the Na’vi — the latest “Avatar” film has already grossed more than $472 million globally — couldn’t save 2025 from a disappointing conclusion.

Box-office revenue in the U.S. and Canada is expected to total $8.87 billion for the year, up just 1.5% from last year’s disappointing $8.74 billion tally, according to movie data firm Comscore. More troubling is that 2025’s domestic box-office haul is projected to be down more than 20% compared with 2019, before the pandemic changed audiences’ movie-going habits and turbocharged streaming in ways that the exhibition industry is still grappling with.

The problem: Fewer people are buying movie tickets. Theatrical attendance is running below last year’s levels, with an estimated 760 million tickets sold as of Dec. 25, according to media and entertainment data firm EntTelligence. Last year, total ticket sales for 2024 exceeded 800 million.

Part of the explanation for the falloff in cinema revenue and admissions lies in the movies themselves.

Industry experts and theater owners say the quality and frequency of releases led to dips in the calendar that put extra pressure on the other movies to perform. Once-reliable genres such as comedies and dramas are facing a much tougher time in theaters, and female moviegoers — who came out in droves in 2023 for “Barbie” — were underserved in a year that largely skewed toward male-leaning blockbusters.

“It’s fair to say that 2025 didn’t quite reach the levels many of us expected at the start of the year,” Eduardo Acuna, chief executive of Regal Cineworld, said in a statement. “A big part of that comes down to a lack of depth in the release schedule, and the struggle of many smaller titles to break through.”

Even big-name stars such as Margot Robbie, Colin Farrell, Dwayne Johnson and Sydney Sweeney couldn’t prop up attendance for films such as Sony Pictures’ “A Big Bold Beautiful Journey,” A24’s “The Smashing Machine” and Black Bear Pictures’ “Christy,” all of which flopped.

And despite the critical acclaim and stacked cast list for Paul Thomas Anderson’s “One Battle After Another,” the film has stalled domestically at $71 million, with a global total of $205 million.

“One Battle After Another” had a budget of about $130 million, while “The Smashing Machine” reportedly cost $50 million and has grossed just $21 million worldwide.

“The challenge facing Hollywood is how to reconcile the budgets of these films with how much they can earn in theaters and down the road, eventually, in streaming,” said Paul Dergarabedian, head of marketplace trends at Comscore.

Universal Pictures’ “Wicked: For Good” hauled in more than $324 million, but it was one of few big blockbusters targeted to women. (Taylor Swift’s “The Official Release Party of a Showgirl,” which brought in $50 million globally, was another.)

Though the summer was marked by a number of big films, including Warner Bros.-owned DC Studios’ “Superman,” Universal’s “Jurassic World Rebirth” and Apple’s “F1 The Movie,” most were geared toward male audiences.

Female-focused films are “are few and far between,” said Jeff Bock, senior box-office analyst at Exhibitor Relations, an entertainment data and research firm. “There should be something for everyone playing most of the time, and that isn’t the case.”

To be sure, there were some bright spots for the industry, including success from young audiences.

Warner Bros. Pictures’ “A Minecraft Movie” was the highest-grossing domestic film this year, with $423.9 million. Close behind was Walt Disney Co.’s live-action adaptation “Lilo & Stitch,” which collected $423.8 million in the U.S. and Canada and a total of $1 billion worldwide.

Counting those two, five of the year’s top 10 domestic-grossing films had PG ratings, including “Wicked: For Good,” Disney’s animated “Zootopia 2” and Universal’s live-action “How to Train Your Dragon.”

“In general, the good news about the year is that most of the big hits involved young audiences,” said Tom Rothman, chair and CEO chief executive of Sony Pictures’ motion picture group. “There is a bit of a youth-quake.”

Disney capitalized on the big year for family-friendly fare.

The Burbank entertainment giant recently crossed $6 billion at the global box office for the year, powered by billion-dollar hits such as “Lilo & Stitch” and “Zootopia 2,” and marking the company’s biggest year since 2019. (Though it wasn’t all sunny for Disney this year, as Pixar’s original animated film “Elio” misfired, as did the live-action film, “Snow White,” which was mired in controversy.)

Another notable youth driver was “Demon Slayer: Kimetsu no Yaiba Infinity Castle” from Sony Pictures in partnership with its anime banner, Crunchyroll. The film had a massive opening weekend haul of $70 million in July on its way to a domestic gross of $134 million and a global total of $715 million, highlighting the increasing popularity of anime.

“The mainstreaming of anime at the theatrical box office is a really significant part of what happened this year and a really good sign,” Rothman said. “You’re bringing in young audiences.”

Not surprisingly, established intellectual property — whether video games, known franchises, novels or comic books — still topped the charts this year, with nine of the top 10 domestic films tied to an existing title.

That familiarity at the box office counts when moviegoers, particularly families, are looking for movies to watch. Viewers can be choosy about how they spend their cash and time, and may not always want to gamble on a movie they’ve never heard of.

“Meaningful IP still has an advantage in getting people to come to the theater, though it’s not the only way to do it,” said Adam Fogelson, chair of Lionsgate’s motion picture group, which saw success this year with an adaptation of Stephen King’s novel “The Long Walk,” as well as franchise film “Now You See Me: Now You Don’t.”

Horror flicks also scared up plenty of business in 2025. Warner Bros., in particular, had a string of wins in fearful films, including Ryan Coogler’s “Sinners,” “The Conjuring: Last Rites,” Zach Cregger’s “Weapons” and “Final Destination Bloodlines.”

In one notable exception, Blumhouse had a rare miss with “M3GAN 2.0,” the follow-up to the 2022 cult favorite. In an interview on “The Town” podcast, Blumhouse Productions Chief Executive Jason Blum blamed the sequel’s shortcomings on a change in genre from the original.

As 2025 draws to a close, industry insiders and theater owners are more optimistic about next year’s box office prospects.

Several big films are set to release in 2026, including Christopher Nolan’s much anticipated “The Odyssey,” Disney and Marvel Studios’ “Avengers: Doomsday,” Denis Villeneuve’s “Dune: Part Three,” as well as Disney and Pixar’s “Toy Story 5” and “The Super Mario Galaxy Movie” from Universal, Nintendo and Illumination Entertainment.

That anticipation is also clouded by the uncertainty of the impending Warner Bros. deal and what that will mean for movie releases.

Many cinema owners fear that a takeover by Netflix will limit or eliminate the theatrical exclusivity of Warner Bros. films, though Netflix executives have said they will honor the company’s current and future commitments to the big screen. And if Paramount were to buy the company, theatrical exhibitors fear that the number of films would decrease, leaving them with less content to show. (Paramount CEO David Ellison has said the company did not plan to release fewer movies.)

Any deal is expected to take at least a year to complete.

In the meantime, Hollywood will wait to see how strong the 2026 slate truly is.

“There are a lot of great titles out there, and that’s why people have been calling 2026 a return to form,” said Bock of Exhibitor Relations. “Even though 2026 is very promising, can Hollywood keep delivering year-in and year-out?”

Fire replaces water as the elemental character in James Cameron’s “Avatar: Fire and Ash.” It’s even weaponized by Varang (Oona Chaplin), the ruthless leader of the volcano-dwelling Ash People, in their war against the rest of the Na’vi tribes.

“After figuring out water in all its complexity in [‘The Way of Water’], we focused on fire,” Cameron said about his VFX Oscar front-runner. “Fire is very much the same — you have to be very observant of [this] in the world. This is where having an understanding of physics — which I do — helps, and this is where a lot of real-world photography and reference comes in handy.”

Creating more realistic-looking fire in CG required Cameron to apply his understanding of fuel and how it burns, including flow rates, the interaction of temperature gradients, the speed of an object that’s burning and the formation of carbon and soot.

In essence, fire became the centerpiece of every scene — and a character with its own escalating drama. That’s where the VFX wizards of Wētā FX in New Zealand came in. They developed Kora, a high-fidelity tool set for physics-based chemical combustion simulations. Kora increased the scale of fire while providing more artist-friendly controls. The film contains more than 1,000 digital fire FX shots, ranging from flaming arrows and flamethrowers to massive explosions and fire tornadoes.

“Physical fire is really hard to control, so we had to come up with how to bend the physics towards the direction that Jim was giving it,” said Wētā senior VFX supervisor Joe Letteri. “Because he was very specific where he wanted the fire, what kind of speed, rate, size, how much or how little energy. He very carefully crafted every component, guiding your eye across it.”

“Fire serves two roles,” added Eric Saindon, a VFX supervisor at Wētā. “There’s always a little bit of low fire going on during quiet moments, but then you get fire that becomes much more destructive whenever there’s an attack sequence.”

In the film’s best scene, where archvillain Col. Quaritch (Stephen Lang) and Varang meet for the first time in her tent, fire takes on a more subtle, mysterious quality. She gives Quaritch a trippy “truth drug” to ascertain his real agenda, seductively playing with fire with her fingers like a sorceress. The scene turns surreal with camera distortion and zoom shots to convey his hallucinatory point of view.

Then Quaritch surprises her with his superpower: the truth. He proposes a partnership to provide his military weaponry so she can spread her fire across the world and he can rule as her co-equal. “In a strange way, they become the power couple from hell,” Cameron said. “He wins her over by sharing his vision.”

The physical properties of fire drove much of the visual effects work in “Avatar: Fire and Ash.”

(20th Century Studios)

Meanwhile, the subtle flicker of fire with cool blues around the edges of the flame is like a magic trick. “She knows it’s about theater, so she presumably has some kind of a gel or makeup that’s on the tips of her fingers so that they just don’t burn away in the first few seconds,” Cameron continued. “She’s able to dip her fingers in some kind of inflammable oil and light them and have them burn like candles. Of course, in his mind, it’s all enhanced much more due to the hallucinogen.”

Cameron praised both actors in the scene, but singled out Chaplin’s performance for the force she brings to Varang’s shamanistic authority. “She understood how the character would manifest her power psychologically and how there was a flip in the scene, where the flow of power runs the other direction at a certain point.”

The director also commended Wētā’s facial capture animation team for achieving a new level of photorealism, thanks in large measure to more realistic muscle and skin movement. “The way Oona’s performance comes through so resoundingly in the character is a tribute to a lot of R&D, a lot of development in the facial pipeline. But I think it really demonstrates how the idea of CG as a kind of digital makeup really does work. What I’m proud about in that scene is that it’s a culmination of an almost 20-year journey in terms of getting exact verisimilitude in the facial representation of the characters as an extension of the actors’ work.”

“It was really fun showing Varang to Jim because he knew what he had in the performance,” added Dan Barrett, a senior animation supervisor at Wētā. “And he included Oona’s idiosyncrasies in the final animation. He was very respectful of the performance.”

In fact, Cameron argues, Chaplin’s performance as Varang is Oscar-worthy. “It may be counterintuitive, but I would argue that it’s a more pure form of acting,” he suggested. “Now, you may say that it’s cheating in terms of the cinematography in the sense that the cards are stacked in our favor because that perfect performance will always be there and will be repeatable as I do my different camera coverage. But it’s not cheating in terms of the acting.”

Cameron has recently been more proactive in demonstrating how the performance-capture process works to academy and SAG-AFTRA acting members so they can better understand it. “It was just us, working on capturing a scene, and I even wrote new scenes so it wasn’t a made-up dog-and-pony show. And they were blown away,” he added.

The Na’vi won the battle of the box office this weekend, as “Avatar: Fire and Ash” hauled in a hefty $88 million in the U.S. and Canada during its opening weekend.

The third installment of the Disney-owned 20th Century Studios’ “Avatar” franchise brought in an estimated total of $345 million globally, with about $257 million of that coming from international audiences. The movie reportedly has a budget of at least $350 million.

Box office analysts had expected a big international response to the most recent film, particularly since its predecessor “Avatar: The Way of Water” had strong showings in markets like Germany, France and China.

In China, the film opened to an estimated $57.6 million, marking the second highest 2025 opening for a U.S. film in the country since Disney’s “Zootopia 2” a few weeks ago. (That film went on to gross more than $271.7 million in China on its way to a global box office total of $1.1 billion.)

The strong response in China is another sign that certain movies can still do well in the country, which was once seen as a key force multiplier for big blockbusters and animated family films but has in recent years cooled to American movies due to geopolitics and the rise of its domestic film industry.

Angel Studio’s animated biblical tale “David” came in second at the box office this weekend, with an estimated domestic gross of $22 million. Lionsgate thriller “The Housemaid,” Paramount Animation and Nickelodeon Movies’ “The Spongebob Movie: Search for Squarepants” and “Zootopia 2” rounded out the top five.

The weekend’s haul likely comes as a relief to theater owners, who have weathered a roller coaster year.

After a difficult first three months, the spring brought hits like “A Minecraft Movie” and “Sinners” before the summer ended mostly flat. A sleepy fall brought panic to the exhibition business until closer to the Thanksgiving holiday, when “Wicked: For Good” and “Zootopia 2” drew in audiences.