I'd like to preface this by saying that I have not watched either Avatar: The Last Airbender or the new film. I also do not intend to watch either. I have other things to do with my time/money, like making amigurumi for AAC. Italicized sentences are direct quotes from Shyalaman defending his casting choices for the movie
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It's the opposite - it costs next to nothing to burn a disc nowdays and ship them out compared to sending multiple versions of a reel (2D, 3D, IMAX, etc) to cinemas.
Most movies recoup their costs at the rental/retail stage and then anything afterwards is pure profit.
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The same goes for digital distribution (Netflix, Zune, iTunes) - they're just extra revenue streams for the studios. But it's these streams where they don't have the power to get what they want (i.e. pricing) and where piracy is the scapegoat when it all goes belly-up for them.
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