Avatar works on the BDP-83 with the 1224 firmware (released around the first of January) and any version since then. Other players were not so lucky and required updates on launch day for Avatar.

Disc compatibility problems are the result of several factors. Some of it is looseness in the BD spec, although I think that's improved since the first year or two. Some of it is weird BD-Java code. Some of it is also DRM, as studios have frequently changed the DRM being used but haven't always given out test discs for manufacturers to use in updating existing players to be compatible with the new DRM. They also don't always do the best testing of new discs - they'll test on the PS3, of course, but sometimes they don't do much beyond that.