Lessons from SXSW: "Keynote: Jason Blum"

SXSW Synopsis:

"Jason Blum is the founder and CEO of Blumhouse Productions, a multi-media production company that has pioneered a new model of studio filmmaking- producing high-quality micro-budget films for wide release. Since its launch in 2000, Blumhouse has produced more than 30 feature films including the highly-profitable Paranormal Activity, Insidious, The Purge and Sinister franchises. Eight of Blumhouse’s recent films have grossed a combined $1 billion at the worldwide box-office on budgets under $50 million. 

Blumhouse's recent films include The Purge, under its first-look deal with Universal Pictures, which opened to more than $34 million with a budget of just $3 million and Insidious: Chapter Two which opened to over $40 million with just a $5m budget."

This Keynote was probably the most immediately useful discussion for my business and personal goals. The Blumhouse Pictures production model is to make low-budget films that have widespread distribution potential. It is essentially "Little Bets" for film production.

The whole session was set up as a big Q&A, so I'll relay the discussion more or less in that format.

Q: How do you deal with budgets of $3-5 million per film?

  • Limited locations
  • Limited speaking parts
  • 20-25 day shoots
  • Everyone above the line works for free or for whatever their union scale rates are

Q: What about actor demands like their own hair & makeup people, amenities, trailers, etc.?

Actors are generally told that they can have any of those things, but they have to pay for them themselves.

Q: So what's the model?

Using "The Purge" as an example, the film had a $3 million and has grossed, to date, $89.3 million.

The way that works is as follows.

First: Find experienced, talented directors (potentially with "something to prove"), and offer them final cut on the film.

"I can't promise you a hit, but I can promise you that the movie will be yours."
- Jason Blum

Second: Everybody gets a piece of the back end, and the process is very transparent regarding payments. If you do X job, you get Y% of the net. There are no surprises. If the movie does well, everybody shares in the return to some degree or another (above the line people most, I assume).

Third: All the movies made at Blumhouse eventually come out and get some form of distribution. To date, Jason Blum claims that Blumhouse has never failed to find a platform for one of their films, even if that platform is video on demand. Being committed to find distribution opportunities seems to be a key driver of how they find talent and remain successful even when some of their bets don't pan out as well as they'd like.

Q: How do you insulate the film-makers from notes or demands from distributors and partner studios?

Their partnerships with distributors are the insulation. Blumhouse submits:

  1. Script
  2. Budget ($3-5 million)
  3. Proposed director for the project

The distribution partner has an opportunity to approve or reject at that stage, and only get involved against once the film has been completed and the question becomes about the scale of release.

Meanwhile, the budgets are pretty firm. If a film gets budgeted $4 million, that's generally it. Film-makers cannot get more money, so they actually have to stick to their budgets.

"If you take away the toys, the director has to focus on story & character."
- Jason Blum (paraphrase)

Q: How do you maintain the $3-5 Million budget in the face of successful franchises and sequels?

Blum avoids "planning" sequels. It's always possible to figure out how to make a sequel work once you know the first film is successful. However, Blum notes that it would be irresponsible for a major studio which has sunk $150 million into a film not to be thinking about how to build a franchise from the first moment.

As a side note:

"It's absurd to go ask for a $5-10 million slary on a $150 million film and then bitch about studio notes."
- Jason Blum

Q: How do you define a good movie? How do you define success?

First: The measure of a good movie is not primarily box-office results. It's revealed over time. A good movie is one that is culturally relevant.

Second: Reviews and critical acclaim are another good measurement, and eventually, box-office results.

Blum also notes the dissonance between the small production budgets and the required advertising & distribution budgets needed to do a wide release. $3-5 million to make the film, and $30-40 million to market and distribute it.

"I think the financial success of any movie is 50% production and 50% marketing. The marketing guys would say 80/20, marketing."
- Jason Blum

Thus, defining success in terms of how successful a theatrical release is makes increasingly little sense. More distribution platforms are ok. Especially in a future with so many available venues - TV, a pile of streaming platforms, etc.

As such, the studios' roles in distribution is slipping.

Finally, Blum notes that with the Blumhouse model, the risks and costs are lower so they can afford to offer directors final cut. But unlike in most larger production environments, the result of this dynamic has been that the directors actually proactively seek feedback, input, and advice the whole way through. Blum claims that their system is less antagonistic between executive producers and studio heads, and the film-makers.

"We (all) think about how marketable movies are from the second we hear about them."
- Jason Blum

The lessons of the Blumhouse model should be fairly applicable to producing shorts and smaller documentary projects through the http:/www.honestenterprise.tv platform and the others that I've been developing. Granted, what Blumhouse does and what I do are quite different. Blumhouse predominately produces horror films, which have a notoriously broad appeal among the most coveted demographics of young movie-goers while being - on average - very inexpensive to produce and market compared to other types of films.

But then, documentaries are even less expensive to make, although they are harder to market. And I want to build social action campaigns around documentary projects. But I think there's a way to modify Blumhouse's system into one that might work for me.


One other story Jason Blum told was about Barry Levinson's movie, "The Bay".

Apparently, Levinson wanted to make a documentary about pollution, but couldn't find the financing. So instead, he turned it into a horror feature that incorporated found footage of people getting sick from water pollution. The horror genre seems remarkably well-suited to political activism.

Sean MaloneComment