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The secret formula behind low-budget hits like ‘Paranormal Activity’ and ‘Whiplash’

Jason Blum explains at Code Media.

Hollywood Producer Jason Blum at Code Media 2017
Blum Productions CEO Jason Blum at Code Media 2017
Asa Mathat
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

The movie studio Blumhouse Productions has become known for doing less with more. Namely, turning low-budget flicks — think “Paranormal Activity,” “The Purge” franchise and indie sensation “Whiplash” -- into blockbuster hits.

So what’s the formula? Blumhouse CEO Jason Blum outlined it in a conversation with Peter Kafka at Recode’s Code Media conference at The Ritz-Carlton in Dana Point, Calif., on Monday evening.

The studio typically spends no more than $4 million to $5 million on a film — and that number isn’t pulled out of thin air. Blum said digital distribution through channels like iTunes can guarantee about $2 million in sales in the U.S. and another $2 million overseas.

Blumhouse also doesn’t decide on whether a movie is going to the big screen or straight through digital until it’s finished. So even if a film bombs and isn’t even put into theaters, the worst-case scenario is typically a $1 million loss.

“I say to the directors ‘I guarantee your movie will be seen, but I’m not guaranteeing how it will be seen,’” Blum said.

What kind of director would accept that pitch? The ones who have a huge hit followed up by bombs, and now feel burnt.

“They’re pissed ... at the system,” he said.

Lastly, genre matters. Blumhouse typically has the most success with its model with horror flicks.

“Horror works because you don’t need [big] names ... you just need a concept.”

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