Director James Cameron just sat down with The Hollywood Reporter to talk about his highly-anticipated sci-fi epic, Avatar, which opens in theaters December 18, 2009. Check out what he had to say about the current state of the project.

When completed, Cameron expects Avatar to be about 60% CG animation, based on characters created using a newly developed performance capture-based process, and 40% live action, with a lot of VFX in the imagery. RELATED: James Cameron Wouldn't Cut Down One Avatar Scene Despite Studio Request

"It is the most challenging film I've ever made," Cameron said.

Still, the innovative filmmaker and digital 3-D pioneer and champion has never shifted his emphasis from storytelling.

"You have to make a good film that would be a good film under any circumstances," he said. "You have to put the narrative first. The reality is no matter how many (3-D) screens we get, you are still going to have a large number of people -- possibly the majority of people -- who see the film in a 2-D environment."

The live-action principal photography for Avatar was shot in New Zealand last fall and winter using the Fusion 3-D camera system. Cameron first used the Fusion to make his 2003 Imax 3-D film Ghosts of the Abyss; he and "Ghosts" director of photography Vince Pace invented the camera system for the project.

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