Successful Budgeting
Photograph by Jeff Minton for Bloomberg Businessweek
When Jason Blum and his wife flew to Morocco last year, they could have gone first class. The cost, though, was $22,000. And Blum, possibly the most profitable movie producer in Hollywood, never pays full price when a cheaper alternative will do.
Instead, Blum bought a row of seats in coach for $1,800. He obtained the measurements of the legroom void in front of these seats and had a custom, trapezoidal air mattress built for $500. He packed this contraption into his carry-on. Once airborne, he inflated it, creating a combined seat/air-mattress surface large enough to sleep next to his wife. Estimated savings: $19,700.
'I got a lot of fans,' Blum says of the alarmed and then envious passengers who witnessed the thrifty episode. 'It's like everything I ever do. Initially everyone thinks I'm out of my mind, and eventually people come around.'
Blum makes dirt-cheap movies that perform at the box office like glossier, costlier big-studio releases. In an industry in which producers are often relieved just to break even, his model reliably creates profits that exceed production budgets by more than 2,000 percent. His 10 biggest hits, including the Paranormal Activity and Insidious horror franchises, have grossed more than $1.25 billion, and none of them cost more than $5 million to make. In October the Hollywood Reporter nicknamed him 'the microbudget assassin.'
Blum is 45 and jittery, with unkempt hair and a face that's prematurely creased, as if he's been staring at a P & L spreadsheet for too long. With 10 films in various stages of development, Blum these days is like the foreman of a movie factory, churning out flicks according to a rigid formula.
Rule No. 1: Talent gets stiffed upfront. Actors, directors, and Blum all get paid zero, or a union-mandated minimum, in exchange for a cut of the profits. 'We never, ever break that rule,' he says. 'And in this current model, we never will. That saves millions and millions and millions of dollars.'
The next biggest savings come from limiting shooting locations and speaking roles. Every picture is shot locally in Los Angeles in 20 to 25 days. Sets are bare-bones. Liberal use is made of inexpensive night-vision and surveillance-camera footage. All the corner-cutting means that some of the movies, such as The Purge-set in a fictional America that's thriving because all crime is legal for one night a year-can feel a little tinny. Audiences don't seem to care. Horror is a forgiving genre with a history of shoestring-budget classics. The Purge cost $3 million to make and grossed $64 million worldwide; its star, Ethan Hawke, earned $2 million, double his compensation in the conventional model.
'Jason has made the game so much more interesting,' says producer Harvey Weinstein, for whom Blum worked for five years before starting his own company. 'The bigger the success, the richer the actors get. He understands that this is a business where it's great to have your talent be participants. Where they take the risk with you, they'll work harder on promotion.'
For their sacrifices, directors under Blum are promised final editorial approval, a rarity on a big-budget studio release. 'My pitch to directors is, 'I can't guarantee you a hit movie, but I can guarantee you that the movie is going to be yours.' '
If test audiences don't respond to a movie, as with last year's erotic thriller Plush, it gets quietly released on DVD and . If a movie does seem promising, Blum links with a major distributor to finance a national marketing campaign and get it onto thousands of screens. released the first five Paranormal Activity movies and will add a sixth installment on Halloween; it's one of eight wide-release movies Blum has slotted for 2014.
His company, Blumhouse Productions, occupies two squat buildings in the decidedly nonglamorous Koreatown section of central Los Angeles. 'We're in the 'hood,' Blum says, leading a tour. He moves so fast he leaves a visitor behind, trotting from the roof deck-the Hollywood sign teeny-tiny in the distance-to the first floor. The office is under renovation; new projection and sound-mixing suites are being installed. These are not extravagances: Blum will save money by doing more post-production work in-house.
A large calendar tracks dozens of imminent movies from every major distributor, arranged by opening weekend. 'One of the important things about horror movies is you need to ramp up,' Blum says. 'You don't want two horror movies on two subsequent weekends, or even two weeks apart.'
A red square marks the Friday when his next film, Oculus, will make its debut. 'We're in great shape here, because these are limited,' he says, pointing to a few indie titles opening the same day. 'They're very small releases, and I'm not competing against these guys.' Blumhouse movies open wide or not at all. 'We're making commercial movies,' he says. 'I always say, 'We're destined for the cineplex, not Sundance.' '
Blum is far from the first producer to turn low-budget horror movies into blockbusters-he works in the shadow of Roger Corman, the B-movie legend. He's hardly even the first to incorporate the cheapness into the marketing- The Blair Witch Project was famously made for $60,000 in 1996 and grossed $141 million. That there's ample precedent for what he does means some in Hollywood wonder why, exactly, Blum gets celebrated around town. 'I admire Jason for cranking out a lot of movies in a relatively short period of time, but it's not like he's creating anything new,' says Mark Burg, a producer of the Saw franchise (worldwide gross: $873 million). 'Every producer, every studio, is capping costs, trying to make cheaper movies.'
What Blum has done is rediscover and fine-tune the model, and he differs from his forerunners in a few ways. He avoids working with first-time directors, preferring people who know how to shoot an entire movie in less than a month. And his films are built to be franchises, which studios like for their more predictable profitability. Corman himself is a fan. Blum 'has been so successful, he could probably give me advice,' Corman says.
Blum has also proved more disciplined than his predecessors at keeping costs in line. Consider the Scream movies, another franchise that started out with a low-budget smash. The original's $14 million budget turned into $24 million for the sequel and $40 million apiece for the third and fourth movies. On the revenue side, each grossed less than the last. On Blum's Paranormal movies, costs are capped at a non-negotiable $5 million, and each one has been in the black.
Blum is also almost certainly the producer who takes workplace frugality to its furthest personal extreme. For example: the makeshift desk he fashioned at home with two broom handles and an upside-down backgammon set, so he could work in the tub. Or the Chevrolet Astro van he converted into a mobile office with a 36-inch TV, Wi-Fi, printer, and other necessities, so he can get in extra work while being driven to meetings.
These days, there are a lot of them. 'We make many more movies than we used to,' Blum says. The majority of the films in the pipeline are horror, but he'd like to expand his model into thrillers and television. 'I'm interested in taking the cost of episodic TV way, way down and giving a very experienced showrunner total creative freedom.'
Comedy remains an unlikely frontier. Blum says funny movies require big-salary stars, and his attempt at a comedy-thriller hybrid earlier this year blew up. Stretch, starring Patrick Wilson and Jessica Alba, was due for a March 21 release, but poor test screenings led Universal executives to yank it at the last minute.
The beauty of the model, though, is that the losers don't lose big. And there are so many hits that Blum is able to break his own rules and take on an occasional prestige project. With Weinstein, he recently optioned A Speck in the Sea, based on a New York Times Magazine cover story about a fisherman swept off a lobster boat. 'I have a more powerful platform now than I've ever had,' Blum says. 'So to not occasionally use that for stories that I find very compelling wouldn't make any sense.'
What Blum swears he won't do is seize on his currency to attempt an Avatar-level billion-dollar hit. 'If you were in here and pitched me the next Transformers, I would say, 'God, that sounds like an amazing movie. But go talk to my partners at , because we're not built to make that movie.' '
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