How Paranormal Activity Became One of the Most Profitable Movies Ever Made

How Paranormal Activity Became One of the Most Profitable Movies Ever Made

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  • Producer Jason Blum Learned From a Prior Development Mistake
  • Paranormal’s Unique Approach to Found Footage Format

As a film enthusiast with over two decades of watching horror films under my belt, I must say that the 2007 release of “Paranormal Activity” was a game-changer for me and countless others. Born and raised in the heart of Hollywood, I’ve seen my fair share of blockbusters and independent films, but none have left quite the impact that this low-budget gem did.


Has any movie been less recognized for its financial triumph than “Paranormal Activity”? On a minimal budget of $15,000 for production, with an extra $200,000 spent on post-production and marketing, the film that catapulted Blumhouse Productions to great heights is seldom acknowledged for revolutionizing Hollywood. Prior to “Paranormal Activity,” Jason Blum, who heads Blumhouse Productions, made a significant mistake during his tenure in development at Miramax in the ’90s – he declined “The Blair Witch Project.” Miramax had the chance to distribute the film, and Blum’s oversight undoubtedly influenced his decision to later fund “Paranormal Activity,” a horror movie that adopted “Blair Witch’s” handheld-camera style.

Following stints working on major studio productions as well as low-budget films distributed by Miramax in the ’90s, Jason Blum uncovered a hidden truth about Hollywood – a financially constrained business strategy can lead to substantial profits, particularly in the horror genre. This tactic has been employed throughout cinema history, with trailblazers like Roger Corman and Russ Meyer using it for adult-themed films in the ’70s. What Blum found in 2007 was that he could effortlessly produce high-quality horror movies essentially on a speculative basis – then sell them to studios at a significantly higher profit due to their micro-budgets. Similar to Corman and Meyer’s method, one or two successes would cover any potential losses from other films. Remarkably, Blum didn’t anticipate that his first film using this approach would gross $194 million worldwide, making Paranormal Activity one of the most profitable films ever (in terms of return on investment).

Producer Jason Blum Learned From a Prior Development Mistake

Blum chose to have Oren Peli handle every aspect of producing the first Blumhouse film, including writing, directing, shooting, and editing, in an attempt similar to how Daniel Myrick and Eduardo Sánchez made significant profits with The Blair Witch Project using low-cost digital video and a small crew. After Paranormal Activity’s release, Blum shared with Bloomberg News his lessons from movie development, stating, “I was influenced by The Blair Witch. I worked at Miramax in acquisitions, and the lesson I learned was to persist, regardless of how many rejections you receive.” For Blumhouse Productions, this also meant keeping costs low enough to produce a complete film instead of just a trailer or teaser.

The allure of the project stemmed from its chilling aspects, building upon the concept of found footage by incorporating home security cameras that emerged during the ten-year gap between Blair Witch and Paranormal Activity. This element gave a sense of realism to the movie, reminiscent of ’80s and ’90s horror films, and raised classic questions like “What’s under my bed?” or “Who is in my new home?” or “What does this ghostly presence desire?”. Wrapping these traditional horror tropes within a found footage style resonated greatly with viewers, as they could easily imagine themselves in the roles of Micah (Micah Sloat) and Katie (Katie Featherston).

Paranormal’s Unique Approach to Found Footage Format

How Paranormal Activity Became One of the Most Profitable Movies Ever MadeHow Paranormal Activity Became One of the Most Profitable Movies Ever Made

The movie itself was skillfully constructed, employing an almost unseen malevolent force that gradually destroyed Micah and Katie’s lives. Watching Katie, possessed, standing over her partner for two hours on their home security footage was a shocking experience. Unlike Blair Witch, which deceived audiences into thinking it was real, footage from the time showed people crouching behind seats and sliding along the aisles during the movie’s most terrifying moments. Moreover, this haunting was subtler and more believable compared to horror films such as The Exorcist.

In my perspective as a supporter, I’d say: “I was part of a unique filmmaking journey where Oren Peli made pivotal decisions that shaped the project significantly. For instance, he used a stationary home video camera for many shots, which eliminated the need for a professional crew. The production was intense, with a tight 7-day shoot.

After Tirelessly Shopping Paranormal Activity, It Found Unparalleled Success

How Paranormal Activity Became One of the Most Profitable Movies Ever MadeHow Paranormal Activity Became One of the Most Profitable Movies Ever Made

In 2007, despite its apparent flaws, Peli compiled an effective segment of the movie and started submitting it to film festivals. This caught the attention of an agent at CAA, who later took on Peli as a client. The cut of the film was then circulated, eventually catching the eye of DreamWorks executives, including Steven Spielberg. They had plans to remake the entire movie with a larger budget, while using the original film only for bonus features. However, Jason Blum and Peli insisted on a test screening for the original version of the film first.

Initially, Peli feared he was dealing with a catastrophe as audiences started leaving the initial viewing of his film. Unbeknownst to him, they were actually fleeing due to being too frightened to continue watching. A few years prior, Paramount had bought DreamWorks and obtained the rights for this movie’s distribution. With this acquisition, Paramount took charge of additional filming, assigning Peli the task of creating two alternative endings for the project. These were the first sequences to incorporate visual effects. Following three years of revisions and festival screenings, the film finally had a broader release in 2009, turning into a massive hit both domestically and overseas. It birthed six sequels and paved the way for the next decade’s Blumhouse productions. Right now, you can stream Paranormal Activity on Max.

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2024-10-27 20:31