Although the sequel came 7 years later, Terminator's alternate ending ties directly into the events of Terminator 2: The Last Judgment (1991).
For those who have seen the first two installments of the saga, but who have not taken a look at the extras of the DVD, it would be easy enough to suppose that the creator James Cameron I didn't have a possible sequel in mind when making the original movie. Since it is easy to imagine making up the story for the second installment out of nowhere after the initial success of the first. However, anyone aware of the Terminator alternate ending knows that Cameron clearly had a second installment long before the film hit theaters.
It's not hard to see why, since James Cameron is very smart and probably knew during production that he, the cast, and the team had put together something really special. Also, the star Arnold schwarzenegger probably helped this idea. Since he remembered telling Cameron how he would like to continue the story almost immediately after production ended.
The Terminator alternate ending has commentary from James Cameron, explaining why the scene was finally cut. Either way, the scene lays the foundation for what would become Terminator 2: The Last Judgment.
How is that scene?
In the Terminator alternate ending, after Sarah Connor's climactic confrontation with the T-800 at the factory, police are shown inside the building gathering evidence. Meanwhile, a man arrives, finds the T-800 chip, and sneaks it to a subordinate. Then she tells him to take it to the research and development department. When Sarah is shown exiting on a stretcher, the camera is removed to show that the factory belongs to Cyberdyne Systems.
This scene from the Terminator alternate ending would lead directly to the events of Terminator 2: The Last Judgment. Where Cyberdyne Systems stayed the remains of the first Terminator and continued to develop the artificial intelligence known as Skynet. In a temporary paradox where Sarah Connor and Kyle Reese caused the creation they tried to avoid.
As for why these scenes from the Terminator alternate ending were cut, James Cameron reveals in his audio commentary that he came to believe that the scene was not necessary for people to understand the implication of what happened. Since it interfered with the conclusion of Sarah Connor's emotional journey.
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