Production - Filming

Principal photography for Avatar began in April 2007 in Los Angeles and Wellington, New Zealand. Cameron described the film as a hybrid with a full live-action shoot in combination with computer-generated characters and live environments.

"Ideally at the end of the day the audience has no idea which they're looking at," Cameron said. The director indicated that he had already worked four months on nonprincipal scenes for the film. The live action was shot with a modified version of the proprietary digital 3-D Fusion Camera System, developed by Cameron and Vince Pace.

According to Cameron, the film is composed of 60% computer-generated elements and 40% live action, as well as traditional miniatures. Additional live action elements were filmed at Kerner Studios on Kernercam 3D systems and RED cameras.

During filming, Cameron made use of his virtual camera system, a new way of directing motion-capture filmmaking. The system is showing the actors' virtual counterparts in their digital surroundings in real time, allowing the director to adjust and direct scenes just as if shooting live action.

Reference: http://www.guardian.co.uk/film/2009/aug/20/3d-film-avatar-james-cameron-technology