¶ Intro / Opening
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¶ Blumhouse's Original Hit Formula
From the Vox Media Podcast Network, this is Channels with Peter Kafka. That is me. I'm also Chief Correspondent at Business Insider. Today we are talking about movies. and how to make them in a world where it's hard to get people to watch movies. That is the challenge facing producer Jason Blum, who has a very good track record when it comes to getting people into theaters.
He is best known for low-budget horror movies like Paranormal Activities, Insidious, The Purge. Even if you never see horror movies, you definitely saw Get Out from 2017. That was his breakthrough once-in-a-lifetime crossover hit.
I've talked to Blum a few times over the years, starting about a decade ago, when he had a really good formula for keeping costs low and returns, at least on a mega super smash, super high. But Over that time it has gotten harder and harder to get people off the couch and into theaters, and I wanted to ask him how he's adapting or not to the new realities.
As you'll hear, Blum is an optimist. He cannot really make movies unless you are an optimist. But he's also pretty clear-eyed about what's really changing and what isn't in this industry. We recorded this one live in San Francisco as part of Business Insider's long play event. Pretty sure we will have more of these to come, perhaps in a city. In the meantime, here's me, talking to Blumhouse Productions, Jason Blum. We did one of these ten years ago.
Right.
You were crushing it, you were doing so well that you became a harbor business review.
Yes, Anita.
For those of you've let your study. If for those of you let your Harvard business review c uh subscription lapse, please Can you sum up very briefly what your amazing
My kids.
The formula you had for making ultra successful movies for very little money.
Uh so different than the case it was k it was that's slightly different than the what the case study was. The formula was I saw an underexploited part of the movie business. I did a I did paranormal activity. That was like the first big hit I had.
And I I was in my mid thirties, so I was old enough to not when you're younger or in your twenties, you have directors who will make a movie and it'll be a big hit and the movie will be a romantic comedy and then they wanna make like a action movie, which is a big mistake because what Hollywood wants is more of the same from what you've done successfully. So after and and getting making hits is one of the hardest things in the world to do. So after paranormal activity.
I did only low budget horror. I did ins a movie called The Insidious, which is a franchise, and The Purge and um and Sinister. Those were the four movies that I did. And my my formula was making independent films.
that were released by studio. So we made these movies. They cost a million dollars. We didn't pay ourselves. So it was easy to negotiate with the directors and the actors who also didn't get paid or got paid scale or as little as you're allowed to pay them. We shared a much bigger part of the profits. of the movies with the people that then the studio shared typically. So in the early years we made a handful of people, an enormous amount of money very quickly, and um and it took off.
From there. If you got movies and you didn't even put movie you didn't put every one of your movies into theaters, you had this sort of rigorous testing, because not every movie was good enough to be in a theater.
Well, that was also very different and new. It's not so new now, but but the notion that a studio This is not independent movies. These are studios. They were Universal, Sony, Paramount was Paranormal Activity. That a stu a studio before we started would never start production on a movie and not have a date for when the movie was going to come out.
And I insisted on my contract with i uh universal, it's still with universal, but we w we work everywhere, but primarily with Universal, that when we and it's no longer like this by by the way, but that when we would make the movie, they would not date the film. And it was a great um it was a great winning strategy because when we made bad movies, which it's impossible not to make lots of movies and some of them be bad.
And about half of them bad is a harsh word, but half of them weren't terribly commercial or weren't as commercial as we hoped and anticipated they would be. But instead of losing money, we would just put them on TV. And so they kind of disappeared. We would make our money back and we would keep taking little bets.
And it was almost it was we w it was compared um in the early days to the pharmaceutical business where you take many, many, many, many little bets and then the ones that would pay off you would lean into. So when you got a purge or you got an insidious
You'd s you'd have a franchise, you'd spend more money on the sequels, and you'd lean into the IP that worked and the IP that didn't work, you didn't get hurt, you got your money back. And I focused in the early days a lot on making sure that the movies that weren't
The the w that didn't get big releases got the money back. And that's how we got the volume. Because as long as we never lost money on a movie, Universal said make as many movies as you want. We would make eight, ten movies every a year, have four released and four go to T V.
So you have this winning strategy.
But that doesn't happen and now sorry to inter sorry to interrupt, but now everybody does that. Amazon makes a movie, they watch it, and they decide if it's gonna be theatrical or like like uh Hail Mary or if it's gonna go straight to streaming. And now that's kind of a norm in the business.
You were doing a lot of stuff that was unique. Other f and now it's not. Lots of folks do horror. niche. Um and the idea of theaters itself, right, is a question mark, right? Dar. Movie going. Movie going shrinks every year. And there's always a debate about why is this happening? Is it going to come back? But it's shrinking every year. Um people go to fewer movies than they do.
This year it's up. Yeah. This year it's up twenty percent. Attendance is probably up ten percent'cause'cause it's a we the the it's a cheat because when they say the box office is up twenty percent, they raise ticket prices and attendance goes down. But attendance is up a little bit this year. But since to your point, since the pandemic
Theater going attendance has not recovered. And even pre pandemic, attendance was on a general decline, but they were raising ticket prices. So box office was going up, attendance was going up.
has been in decline since two thousand two. You say it's back this year. We'll see at the end of the year.
It's not back to what it was. It's just a little better than last year.
¶ Adapting to Evolving Movie Business
What I want to get to is how have you adapted your model to comport with the world, right? People are it's harder to get people into theaters. Horror is not a unique thing anymore, lots of people are doing it. How have you adapted your model to that?
Yeah, we we've changed our b our business. So so the movies that we made in the in the old days were were really they were programmers, which means when you there was there was a lot of walk up business to movie theaters. So kids would go to the movies, they would not know what movie they were going to see. They would get to the thing. They would look at the choices, like, I'm going to go see this horror movie. Those were usually movies that we made.
Those movies don't exist anymore. There really aren't programmers anymore. Almost everyone going to the movie is going to it's too expensive, I think, in my mind. And so it's like it's taken that part of the business out. And I think um As an entrepreneur, I think the hardest thing to do is
When you first start a business and or if I didn't go to business school, but what they teach in business school, as all of you guys know, and what they what they first tell you is you gotta focus, focus, focus, focus, focus. And that's what we did. We had paranormal activity, it was a low budget horror movie. Everyone said,
You should make World War Z. You know, now you had a hit movie in Hollywood. You should and and the general r religion of Hollywood is if you make a movie for five million dollars and it's a big hit, you should make a fifty million dollar movie. And if you make a fifty million dollar, it's a big hit. You should make a$200 million movie. And I threw that out and I just said, I'm just gonna make low budget horror movies.
So I did focus, focus, focus, repeat, repeat, repeat, stay in horror, stay in horror, stay in horror. But then to just finish my point, I think you also as an entrepreneur, have to like be aware of what's happening in the world around you and be able to pivot. And I think it's very tricky to know how much to focus and how much to pivot. Um and uh and so the way we we we had to pivot because
post pandemic of programming movies have disappeared and horror has become much more event driven. They're the the movies are bigger and they have to feel um You have to give people a reason to want to go see a horror movie two weeks in advance of it coming out.
So we pivoted in in two ways. The movies we don't we make movies that are relatively inexpensive, but nowhere near as inexpensive as they used to be. So we're spending more money on the movies. And we had our number the number two competitor. to Blumhouse was a company called Atomic Monster. Atomic Monster is most famous for all the conjuring movies and the nun and all the spin-offs of the conjuring movies. And so um three years ago we merged with them and that was a way to
increase our output without decreasing the quality of what we do. And so far it's been uh it's been very successful. So I'm glad we'll
We've got a new movie coming out soon.
We have a new movie coming out called The Mummy, which is a Warner Brothers movie, which opens Friday, which is an atomic monster movie actually.
So how is that different than a movie you would have made ten years?
So the mummy mummy costs twenty two million and not four million. Again, by studio standard still inexpensive, but not as inexpensive. The other big um component to our model. And I took advantage of the fact that if you're an executive at a studio and you're hiring a director, It's you're very incentivized to hire a director whose last movie was a hit.
Because if you make a movie as an executive and the movie doesn't work and your boss says, What the hell were you doing? You can point to the director and say, Well, look, the last movie they made was a hit. So I assume this one would be two. So the result of that is that directors who made a hit one movie ago, but their most recent movie is not a hit.
almost never get h almost almost n never would almost never get hired. And certainly in the movies, they would go to T V or whatever. They were really prejudiced against. So we would go to those people. And it was like an arbitrage opportunity. We'd go to them and say, I'm not gonna pay you but uh but uh but I'll give you final cut so I'll let you do what you wanna do and they always had something to prove. And we would say, And if the movie works, I'll share
a big piece of it with you and you could make more money than you've ever made if the movie works. And that that was very successful. That worked for that kind of programmer type of movie. But now to make event horror, you need Flyer. You can't really take a flyer. So Lee Cronin directed it. He he's like a he's he he he's never missed. And so he's
It's not a good idea.
Even in the title, yeah. So in that in that way it's a l it's not quite as fun as it used to be'cause you can't really take flyers like like you could. So we're working with more in demand people. We used to work with with people who were less in demand. In fact Amazing story. James Juan, who is my partner who runs Atomic Monster, who's the company that we merged with. I met James because he uh famously wrote and directed and conceived of Saw, which is one of the biggest horror franchises. Um
Ever as as as uh as everyone here knows, we actually just acquired it for him to kind of re he did one movie from Saw and then they made eight without him and we're gonna he's gonna just kinda reboot it. But regardless, that that's not the story. The story is Uh, he did saw and then he did two movies for Universal that didn't work at all. And he came to my office in two thousand eight or something when the company started.
And he said, I have an idea for a horror movie. I can make it for$900,000. He said, I'm known for making Saw and it's like this R-rated movie. And I just want to make a PG 13 horror movie. It's called Insidious. 900 grand and Insidious Now that we're on our seventh one. It comes out in August. It's an eight hundred million dollar franchise. And that was the greatest example of the guy could not get arrested. We gave him nine hundred grand and it turned into eight hundred million dollars.
You've talked about in this era the importance of IP. The people need to know what the thing is generally and that's usually what works. People have to know what the brand is, what the
part of the no walk up, yeah. That they want something something familiar.
It's the mummy. Is it the micronin or are they responding to that? What are people?
responding to the mummy. They're responding to the mum. But I mean, the hope is they're responding to the mummy. We'll see if they respond. But the idea is we did the Invisible Man, which uh as a horror movie.
Um I've heard of this character, I'm vaguely familiar with what it is.
Yeah, yeah, exactly. Or we do or or or we'll do mo we're doing the Dead by Daylight video game as a movie so that there's something out there and that's a different that's different. You know, it didn't used to be like that.
¶ New Strategies: Budgets, Mergers, IP
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¶ Consolidation and New Market Players
And we're back. Another thing that's changing in in Hollywood is there's contraction, right? There was a the content boom, streamers are pulling back, and the studios themselves are are gonna consolidate, right? Paramount is just about to buy Warner Brothers. That deal will probably go through later this year. Um, what does that mean for you if there are if the studios are consolidating? There's less buy.
I think that's a it i definitely there there's more on T V and less in movie theaters for sure. So I think it's it's it's more of a more transitioning than actually sh shrinking, although it is true of movies. I think there's Consolidation is not good for our business for sure. So it's ideally there would not there would be less of it. I do think it's not quite there are three new massive players in our business.
um that weren't there ten years ago. So Amazon and now Amazon has had this big hit with Hail Mary. So I think they're very squarely in the theatrical business. Apple was in it, they went back in it with F one, there's a chance they'll come back in it. And if and if Ted like is so believed he talked how much she's changed his mind about theatrical. So obviously they're a huge player in T V, which there wasn't
you know, there was no Netflix fifteen years ago, but if they come into movies too. So I do think there are there are new players in the space as well, which doesn't get enough attention when people are talking about consolidation. But that said, the consolidation is not good for
What would that mean for you as you're thinking about how you're gonna make your next slate? Knowing that there used to be that there was Paramount Warners and now they're gonna consolidate and in theory they're gonna keep making as many movies as they were before, but realistically.
It means working with different partners. We made a movie called Lost Bus that uh Matthew McConaughey starred in for Apple. I don't know if anyone saw that it was on Apple, but it but it was it was a successful movie for that. Anyone seen Lost Bus? So sad. It's a great movie. Two hands. It's a Northern Californian story. It's about paradise, the fire in paradise. And this bus driver back.
This little company, Apple.
Thirty people.
Cảm ơn các bạn đã theo dõi và hẹn gặp lại.
Yeah, Apple's really got it exactly. Um so we're working with new partners. That's one of the way to the di what that's one of the ways. And we're making event we're not making programmers anymore, we're making event horror movies. That's how we're dealing with it in the theatrical space. But then we're also Okay, a little more people. So we'll get that show. So we're and you know some
Yeah, one person. Uh so we're we're branching out into television, into games, into live events, but the core business is still the theatrical movie business.
There is a w letter that went out yesterday, uh, from a thousand influential people, includ including some of them who work at Paramount and Warner, saying this deal should not go through. Do you think they're misguided d um to to express that concern?
No, I think they're right. I just don't think it's gonna stop the deal.
It's happening.
The deal's happening. Yeah. The deal the deal's ninety-five percent chance happening.
So y you wake up in the morning and go, all right, there's less studios than there used to be, that's just the way of the world, nothing I could do about it.
Less studio's same amount of buyers.
Because of the new buyers.
Less studios, but Amazon, Apple, yeah, there's an there's a new buyer. So the same amount of buyers. I have I I want um Apple and Netflix to get as excited about theatrical releases as Amazon. Which is a small task I'm working on. Um, but I have hope that that that that that that that that could help.
¶ Navigating AI in Hollywood
Is gripped with excitement and a little bit of fear about AI. Um, I'm supposed to ask you about it. My my my guess is you.
I can't wait.
interested in talking about AI.
Oh, I'm extremely interested in AI. I think and I know this is probably not a popular thing to say here, for m the m and just for this little thing. I'm not talking about medicine or the environment or coding or anything else.
For making of the movie movies and T V show, if I could wave a wand and make I AI disappear, I would. I don't think it's going to be I don't think I don't think it's going to improve the quality of what you see in the movie theater or at home. I do not think it will do that. Um that said The idea that um it it really bothers me when a lot of people in Hollywood just are like, We're not doing a it's so crazy. It's like we're not using electricity. Like obviously
AI's here, it's here to stay, it ain't going away. So our So our our our our attitude and my attitude about it is learning about it as much as I can, personally, like using it a lot to figure it out. um and encouraging the um executives at the company to do that, to figure it out. And the directors, it's a personal choice. Some directors
We'll say they'll never use AI and I'm not gonna change their mind and so we don't. But if a director wants to use AI or a filmmaker or a producer or a writer wants to use AI, I wanna make sure that my company can provide information about how to do that. And so that's my that's my
You guys that did a deal with Meta to sort of play around with it?
Deal with we made three little AI shorts for Meta. We got destroyed uh on Twitter for doing that. But I learned a lot. I learned a a lot. I learned I I don't think I was as confident before I made those three shorts that AI would not make content better. And I was very confident after doing those three shorts that it will not for a long
Once a week on Twitter, there's a clip that says, Hey, Hollywood is cooked, and then they'll show you uh an AI video of Tom Cruise fighting Brad Pitt or whatever it is.
Uh yeah.
And I said we're obviously gonna make the this is this Hollywood's over.
I have a very specific theory about this. I haven't tried it out much, but um I think for once You know, creators are always YouTube creators are always fucking killing it and and and we're like uh people who make scripted TV show and movies have always are are like more and more second class citizens to Mr. Beast and da da da the the all the growth is in creators. I think
The the for once, the threat is much more to creators than it is to I don't think AI for a long time is competing with watching Scarpeta or going to see the mummy. But what it is competing with is scrolling and like on Instagram and and like Doom Scroll, I think there'll be a ton of AI there and and you will see that. So I think for once creators have more to worry about than directors and writers.
You don't think that that is competition with you as well because they could be
No, I I I'm not com I'm not I am not competing with YouTube creators. I'm competing with other people who make movies and TV shows. It's a different thing.
You think that you you think that
They're eating into my market. I mean I in that way I am.
way they are competing with you. They're competing for your time.
I just I just I just I I can't I can't do my job thinking like I I I'm trying to make a movie that people who love to go to the movies Love and go see and make a hit movie. And like I said, making a hit movie is so elusive. So I don't think about as I'm making a movie like I hope like the kid who watches Mr. Beast is gonna see my movie instead of watching Mr. Beast. I just can't think that way. I probably should. I probably should think that way.
Probably watches a lot of Mr. Beast.
No, no, of course.
Of course, of course, of course, of course. But but when I'm in my market competing for directors and stuff, I'm not I'm not thinking about YouTube. I'm thinking about what the horror market is and the other horror movies and how I fit into that.
¶ Producing Challenges and Learning from Failure
How are you thinking about getting people off the couch and into the theater today? I mean, obviously you're trying it every movie ev that's the goal of every movie.
Well that's what I that's my job. That's my job.
That's the core of it. But what are there precepts you're thinking about? Like, okay, mm something they're familiar with, they're they've heard of the mummy, let's make a movie about the mummy.
There are all sorts of fine lines you walk as a or I walk as a as a producer entrepreneur. How much to stay the same, how much to change.
How much
to lean into IP, how much to do original. Then when you even have the IP, like how much to be faithful to the old mummy movies, how much to reinvent the mummy. And the the real job, I've been thinking about this lately, everyone always says what a pr what does a producer do? And I think every producer, including myself, has the stupidest answer. But I think us a a more thoughtful answer is a producer is like always walking that fine line.
So what I do every day is walk that fine line of is it worth paying this person this much money to do it or should I pay someone a little bit less to do it? And will that make the movie profitable or not? That's what I do. That's my that's the core of what I do every day. You learn much more from failure, of course.
And what's what's what did you learn most recently? What's your last failure?
He's alluding to Megan too.
No, it's a game. There might have been something else.
Big bomb with Megan two.
That was a year ago. If your last big bomb was a year ago, that's pretty good.
Was that a year? I think it was. I think it was so painful. Um Um, Megan is a great example of being overconfident where I screwed up on my line. You know, I got, I got, I got off the line. It's it's actually a great example. So we did this movie called Megan. It was a big hit. And um we created a c character and we we we jumped into like we've created a Megan universe and we made a cousin to the Megan. We made a sequel and we made a cousin to the first Megan.
before we had a second you don't really have a franchise until two movies succeed. Not until you make the second movie, until the second movie works. Um, so clearly we should not have made a cousin to Megan before we had released Megan too. So that was one mistake. I didn't even talk about that. Um and the second thing.
Is that we thought Megan was so successful that, and this is exactly what I was talking about before, that we could go very, very far outside the lines for Megan too. So the first Megan was kind of a horror movie that was. funny and the second Megan was like an action comedy. It had Meghan in it, but it's a great example of we went we stretched too far. We went too far. We went too far.
in a on a sequel, you're always thinking that you don't you don't want to make it too much like the first movie because people say you're ripping off the first movie and you don't want to make it too different from the first movie because then people say, Well, why is it a sequel? And so that's a great example of where we went too far. They said, Why is it a sequel? And the franchise died. But she'll live again in some other way.
We predicted successfully that we would fill the time without getting to QA.
We did it. But does anyone have a quick question? Do we have to stop? Okay, great.
Jason's hanging out. He asked some questions after. Thanks again to Jason Blum. Thanks again to the Business Insider Events team for putting this one on live in San Francisco. Super fun to be here. Thanks to Charlotte Silver, who produces and edits this show. Thanks to our sponsors who bring it to you for free. Thanks to you guys for listening. saying hi in San Francisco.
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