November 29, 2023

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Jason Blum: How the ‘Exorcist: Believer’ producer’s micro-budget horror movies make Warren Buffett-like profits

The Hollywood Legend of Jason Blum has been told so many times by now that he could sell the IP: how as a struggling young producer he turned Paranormal Activity, the $15,000 found-footage thriller from 2009 that everyone told him was worthless, into a $890 million global theatrical franchise. How he used the spoils to build his production company, Blumhouse, into a horror hit factory that has since made nearly 200 movies and grossed $5.7 billion at the box office. How even as Hollywood’s giants have seen a 90% drop in profits over the last decade, even as streaming platforms have watched their subscriber bases plateau, even as the entire theatrical business—the very idea of going out to see a movie—has become deeply imperiled, Blumhouse’s hits keep coming and coming and coming. Like a serial killer with a machete in one of his movies. There’s your log line.

But there’s another version of Jason Blum’s origin story—more of a prequel, really—and it takes place in 1962, seven years before he was born. It’s a story about Jason’s father, an ascendant young L.A. art dealer named Irving Blum, and it opens with the day he visited the small Upper East Side Manhattan apartment of a kooky weirdo who was painting a ludicrously extensive series of Campbell’s soup cans. Thirty-two of them. No one in the New York art scene liked Andy Warhol. Soup cans? Was this some kind of joke? 

On the spot, Blum offered Warhol his first solo show in Los Angeles, but just for the soup cans. All 32 of them, and nothing else. 

The Warhol show at Blum’s Ferus Gallery was a big happening in the protean L.A. art scene, and he sold five of the paintings, for $200 each. The actor Dennis Hopper bought one. But before the canvases shipped out, Blum decided he couldn’t bear the thought of the soup cans being split up. Warhol agreed, so Blum set about buying back the canvases. Then once he’d reunited them, he bought all 32 soup cans from Warhol for $1,000, which he paid in $100 increments over 10 months.

Irving Blum turned out to be the only private owner of Warhol’s now-iconic series. In 1996 he sold them into the collection of New York’s Museum of Modern Art, at a steep and generous discount, for $15 million. They’re up there on the walls at MoMA right now, all 32. 

Jason Blum knows every detail of this story, every fateful twist and turn in the tale. His middle name is Ferus. In Latin it means “wild” or “savage.” Suffice it to say he’s thought about this a lot. 

Paranormal Activity was my soup-can moment,” Blum says now. “The parallels are crazy. And I’m sure the only reason I hung on to Paranormal as long as I did is because somewhere in my head, I was thinking about that soup-can story.” 

Building the Disney of horror

Jason Blum’s country retreat in the low mountains of central Connecticut is the kind of house where, in a Blumhouse movie, something terrible happens. It’s a modern-style Tetris of open sunny squares, filled with hard-right angles for ax murderers to hide behind. 

And if someone who looked like Jason Blum were to open the front door in a Blumhouse film, everyone in the theater would immediately think: Oh, that guy is so dead

He’s a fit 54, an avid triathlete, and handsome in a rakish 1980s Michael Douglas kind of way, with blue-tinted glasses and thick, wavy salt-and-pepper hair combed straight back. We talk over lunch on the covered deck—swordfish piccata prepared by his personal chef, followed by blueberry crisp. The tranquil summer forest outside has the uneasy calm of a first act. 

Blum appears to have it all. Three adorable kids, 8, 5, and 2. A screenwriter wife, Lauren Schuker Blum (whose own movie, the buzzy indie comedy Dumb Money, came out in September). An eponymous company clicking on all cylinders. He has built a reputation as a kind of Warren Buffett of horror flicks: He buys cheap upfront and cashes in spectacularly later.

Jason Blum’s smashing success with thrillers made on the cheap has upended the streamers’ pay model.

Clara Mokri for Fortune

Blum founded Blumhouse Productions in 2000, and after a humbling decade before his first breakthrough success, he spent the next decade making global box office hits (The Purge, Insidious, The Invisible Man, M3GAN) for little more than the catering costs on a Marvel movie. He mixes it up with tense thrillers (BlacKKKlansman, Whiplash) that collect Oscar nominations without even trying. 

In 2017, Blum gambled on a low-budget horror film by the sketch comedian and first-time director Jordan Peele, and it turned out to be one of the most socially important films of the decade. Get Out, a darkly comic allegory about the Black experience of racism in America, cost just $4.5 million to make and earned $255 million worldwide. It won Peele an Oscar for his screenplay. 

At the moment, Blumhouse is in the final stages of a merger with Atomic Monster, the horror production house formed by Insidious director James Wan, and once the deal is complete, the combined company will have a stranglehold on the genre. Blumhouse will be the Disney of horror, only with better profit margins.  

Of course, this is exactly the moment in the movie when the main character’s demons drive him to a fateful decision that puts it all at risk. 

Which brings us to The Exorcist: Believer, a new chapter of the 1973 horror classic, from the filmmaking team behind Blumhouse’s wildly successful reboot of the Halloween franchise. It’s Blum’s biggest gamble yet—financially and reputationally—and he knows it. “There’s a spotlight on it,” he says during lunch, “because it’s the reverse type of deal than Blumhouse has ever done.” 

The ‘Blumhouse system’

In Hollywood, Blum’s company is renowned for its low-cost, high-reward “Blumhouse system” of moviemaking, the core of which is a simple proposition: To keep budgets down—which used to mean $5 million to $8 million back in the Insidious days and now means more like $10 million to $12 million—the creative principals work for the minimum required by union contracts (known in the industry as “scale”) in exchange for bonuses and back-end profits based on the film’s performance. The bigger the profits, the bigger the bonus.

It’s “betting on yourself,” Blum likes to say. The system, he argues, gives artists creative freedom while incentivizing them to do work that resonates with audiences.  

For directors, scale means around $300,000, a fraction of what big names command elsewhere. For a Blumhouse lead actor, it’s about $65,000 for five or six weeks of work—even for stars accustomed to making millions per film. That’s the kind of deal Ethan Hawke, one of Blum’s oldest friends in the business, took to star in the first two of his three Blumhouse films—Sinister, The Purge, and The Black Phone—which grossed a combined $340 million. Hawke, the consummate indie actor of his generation, is now a very rich man.

The Blumhouse system is “just an exaggerated and more clear-cut version of the classic system of sharing in success,” Blum wrote in a 2022 op-ed for the New York Times. “The same deal that the publishing industry offers with royalties and that traditional Hollywood studios always have used and still do.” 

It’s a very different deal, however, from those offered by the streamers who have upended Hollywood’s business model. Netflix, Amazon, Hulu, and others built their original content libraries in part by luring big-name talent with huge upfront checks. But after that initial payment, there’s little in the way of residuals based off profits. And because the streamers won’t share their metrics, there’s no visibility into how films and shows are performing. 

The blank-check “golden age of streaming”—$465 million for one season of a Lord of the Rings show, for example—is officially over. The question is what will replace it. 

One of the central issues in this year’s industry-crippling SAG and WGA strikes is the mystery of just how much the streamers are pocketing off creatives’ work. And this, Blum likes to note, is one of the virtues of his system: Since bonus payments are based off widely available box-office data, the transparency is built in. His fondness for snapping selfies as he drops fat bonus checks in the mail has become an industry meme. He has banked years of trust in a town where trust is at a historic low. 

Creative frugality

The opening scene of 2012’s Sinister, one of Blumhouse’s early hits, is footage from a snuff film of a young family of four being hung from a tree in their backyard. It was the first project that Blum brought to his new studio partners at Universal Pictures after he signed a three-year “first-look” deal with them in 2011, essentially allowing Universal right of first refusal to partner on his projects. 

Sinister was quite an introduction. “Mostly what I remember,”  NBCUniversal chief content officer Donna Langley says now, “is hiding my eyes through the majority of that screening.” 

Everyone in the room did, Blum tells me, grinning like a wolf. “I think they all said, Oh, my God, why did we do a deal with this guy?” 

Universal ended up passing on that one, and Summit Entertainment bought it instead. It made $88 million worldwide on a budget of $3 million

A year later Blumhouse and Universal released their first coproduction, The Purge, again starring Hawke. Made for $3 million, it spawned four sequels, with a fifth on its way, and a TV spinoff. Total revenue to date: $535 million. Langley hasn’t doubted Blum’s instincts since. After the original three-year deal was complete in 2014, Universal re-upped with Blumhouse for an additional decade—an eternity in Hollywood.

Keeping budgets down isn’t just about paying everyone scale. It requires its own form of creative frugality. Casts are generally kept to a minimum. (“Waiters don’t speak in our movies,” Blum has said, because if a Guild actor utters so much as a word, that’s an extra $800.) And no action sequences—way too expensive. Blumhouse movies often take place entirely in one house. Blum also detests visual effects, which he finds corny and distracting. He can’t believe how much the big studios spend on them, he tells me, and they still look terrible.

“Waiters don’t speak in our movies,” Blum has said. If a Guild actor utters so much as a word, that’s an extra $800.

Most Blumhouse movies are not exponential hits like The Purge. In 2023 alone, Blumhouse has already released eight movies, and unless you’re a horror buff, you haven’t heard of most of them. With a staff of 90, it makes movies at studio volumes—a dozen or more each year. 

Most go direct to streaming, in which case no one involved in the production, including Blumhouse, sees any more checks. Blum promises his filmmakers creative control, but not a wide theatrical release. They’ve got to earn that—and plenty of Blumhouse movies don’t, to their creators’ frustration. But when your entire budget is $7 million, even the flops often pay for themselves or turn a small profit. 

Blum is forthright about projects that didn’t work, like the sequel to Sinister (“It was bad”), or that flopped in theaters, like Freaky—a send-up of Freaky Friday, only this time the teenage girl switches bodies with a serial killer. (Freaky is among Blum’s own favorites, he told Fortune. It guts him that no one saw it.) 

But the beauty of Blumhouse’s micro-budget approach is there’s no such thing as a box-office catastrophe. The bombs are just blips. 

Blum argues that there’s a counterintuitive relationship between money and creativity in Hollywood: The more you spend, the less creativity you can tolerate; and the less you spend, the more indispensable creativity becomes. 

Studio movies are so expensive now, so freighted with financial risk, that only the safest bets—with tried-and-true IP, preferably a superhero blockbuster with bankable stars attached—get greenlit. 

And then every executive spends every day of production starching the creative risk out of every decision, because no one involved can afford to be wrong. If necessity is the mother of invention, financial risk is what smothers it with a pillow. 

At the studios, “people are so afraid of getting fired, they’ll tell us, ‘Hey, I don’t want this to blow back on me, I’m afraid of losing my job,’ ” says M3GAN coproducer Adam Hendricks, whose company, Divide/Conquer, has made 16 movies and counting with Blumhouse. “People won’t go out on a limb.” At Blumhouse, he says, “they don’t seem to have that fear. They’re more willing to lean into the risk … It’s like, they look at the upside, instead of protecting their ass. That’s incredibly rare right now in the movie business.”  

Other filmmakers have tried versions of the Blumhouse model—forgoing big upfront fees for a larger cut of profits—including the directors Steven Soderbergh (with Logan Lucky) and Todd Phillips (with The Hangover). And that’s the idea behind Matt Damon and Ben Affleck’s new production house, Artists Equity, which produced this year’s Air. The system made creatives feel “empowered—treated like grownups,” Affleck told the New York Times

Art chosen by humans, not robots

What Blum loves most about making low-budget movies is that he gets to say yes to things he likes.

Blum says he’d be a terrible artist, but he has a sharp radar and the guts to trust it instead of the algorithms. (“I hate data,” he told me.) Like his father, he’s got a gift for spotting talent in the ferus

Every so often, Blum will swerve out of the horror lane, but one cardinal rule is that his films are always dark. Blumhouse does not do rom-coms. There will be no Insidious! The Musical. Even the projects that seem like exceptions really aren’t. Whiplash, about a gifted young drummer and his tyrannical instructor, is a dark, emotionally violent movie that plays like a thriller. The Good Lord Bird, Blumhouse’s 2020 miniseries with Showtime, was about slavery, which he calls “the most horrible thing this country ever did.” 

More than the tight budgets and trusted collaborators, this is Blumhouse’s true secret sauce: mission discipline. “It’s very easy for a producer to be seduced by a higher budget and visual effects, and Jason hasn’t done that,” Langley says. “He hasn’t fallen into that trap. I think he knows that he’s got a winning formula and he doesn’t want to do anything to mess with it.” 

And partly because of this devotion to his formula, Blum says, he’s very used to hearing no. He has worked with a few stars, but A-list actors and brand-name directors know that to work with him they have to do it the Blumhouse way: dark and cheap. He asks them all the time—if you ever want to make a horror movie, give me a call!—but they almost always say no. Bradley Cooper said no to him just the other day. 

“I’m not even one percent annoyed. Like, I’m zero percent annoyed,” Blum says with a big laugh. “The amount of people who’ve said no to things I’m asking them to do—the list is hundreds of thousands of people.” What does annoy him, he says, is when executives say no. “If I send a horror movie to Universal and they say no, I get annoyed by that. That bothers me.” By now, he reasons, they should know better.

A ‘meet-cute’ with a scream queen

Blumhouse’s 2018 reboot of the moribund Halloween franchise was a turning point for the company—and a test of whether his vaunted system, known for producing original stories in a sea of sequels and reboots, could also breathe new life into old IP. 

First, though, he had to sell John Carpenter, the famously gruff mastermind of the 1978 original, and Jamie Lee Curtis, its original scream-queen star, on his modern vision of killer Michael Myers. He needed Carpenter’s blessing for horror fans to take his film seriously, and he wanted Curtis to reprise her character, now in her older-and-wiser Linda Hamilton–esque survivalist phase.

When Curtis heard Blum’s opening offer—a classic Blumhouse deal, scale upfront, then a share of the profits forever—she told me, she threw her phone across the room: Screw your Blumhouse system. Pay me what I’m worth for this. “It was our meet-cute,” Curtis says now. “Me throwing my phone across the room.” (She wound up taking scale, but a larger than usual cut of the profits.)

Now the two are fond collaborators. “There’s a really enthusiastic boyish quality to Jason,” Curtis says. “A joyfulness and a tenacity that are kind of at odds. They surprise you on both sides.” Next up for Curtis is her production company’s first big venture with Blumhouse: a show for Amazon based on Patricia Cornwell’s Kay Scarpetta crime novels, in which she’ll costar with Nicole Kidman.  

When Jamie Lee Curtis heard Blum’s first offer, she threw her phone across the room. “It was our meet-cute,” she now says.

Halloween cost about $10 million; it earned $260 million and spawned a pair of hit sequels. The films’ director, David Gordon Green, keeps a framed copy of Blum’s original email pitching him—subject: Halloween?—at the waterfront home in Charleston, S.C., that Halloween bought for him. He pulled it off the wall to read it to me during our Zoom interview.

Green wasn’t an obvious choice to direct: He made his name on indie dramas and then stoner comedies (The Pineapple Express) and profane Deep South satires (The Righteous Gemstones) with his film-school bestie Danny McBride. But the Halloween franchise went so gangbusters, and the whole experience was so satisfying, that Blum and Green decided to try it again, this time with a horror classic that inspired a whole subgenre of imitators, including more than a few by Blumhouse itself: The Exorcist

The Exorcist: Believer is the most anticipated horror film of the year and Blumhouse’s biggest risk yet.

Universal Pictures—Courtesy of Everett Collection

Blum’s biggest bet yet

There’s something a little on-the-nose about the devil finally coming for Jason Blum with a reboot of a film about children possessed by demons, but here we are. 

With Halloween, Blum’s distribution partners at Universal already owned the IP, so it could be done on the cheap. For Exorcist, Universal had to go buy the rights from another company, Morgan Creek Entertainment, and it had to promise to make a whole trilogy. Total price tag for the deal, including the movie budgets: $400 million. 

In order for Universal to take a deep breath and write that check, the whole Blumhouse rule book had to be ripped up. Exorcist: Believer was made for $30 million—a pittance for a studio production, but three times the cost of a regular Blumhouse movie. Universal paid it all upfront, but it gets to keep all the profits. No back-end profit share for Blumhouse this time. 

So why’d Blum do it, when his system was yielding success after success? 

Because he really wanted to make an Exorcist movie. “I was dying to do it,” he tells Fortune. “I didn’t think twice about it.” 

Still, it’s an anxious moment for Blum. “It’s the kind of deal that I’ve just spent this entire morning telling you I hate,” he says over lunch. Yes, he’s already been paid, but his partners at Universal are on the hook for nine figures. And if the movie tanks, they still have to make two more. 

This is a Blum bet that could actually go very wrong.

Horror as a ‘trojan horse’ for art

Hollywood executives always say they love artists. The writers’ and actors’ strikes unleashed a torrent of lip service. But Blum grew up surrounded by art and artists. His mother was a Northern Renaissance scholar. His father would bring him along for studio visits and gallery openings, and he’d stand off to the side, watching and learning. “So much of my career was informed by my upbringing and by the extreme emphasis on art,” he says. 

After Ferus Gallery shuttered, Irving Blum moved the family back east, and in 1973 he opened a new space in lower Manhattan, Blum-Helman, that he built into an art-world powerhouse. 

By the time Jason was 6, though, his parents’ marriage had fallen apart, and he had moved with his mother upstate to a tiny two-bedroom cottage in Dobbs Ferry, N.Y., spending weekends in the city with Irving. “My dad had money,” he says. “My mother had no money… I think that was confusing for a kid.”

Mostly, Irving’s attention was elsewhere: “My dad really relates to art in a certain way, in a more emotional way than he relates to other people.”

Blum didn’t grow up a horror fan, and in a business full of phonies, it’s refreshing that he doesn’t pretend otherwise. He once said on a podcast that his three favorite movies are Citizen Kane, Goodfellas, and Moulin Rouge. But he came to love the horror genre for its defiant anti-elitism—the elites always get slashed to ribbons first—and for its scruffy low budgets. 

“The amount of people who’ve said no to things I’m asking them to do—the list is hundreds of thousands of people.”

Jason Blum, Blumhouse Productions

Horror, he says, is “a Trojan horse” that enables him to “use the mainstream system to do subversive stories. There’s no other genre you can really do that with. You can’t do it with comedy. You can’t do it with action. And you really can do it with horror.” 

He’s not just talking about the Oscar-anointed ones like Get Out. The Purge is about gun culture pushed to its illogical extreme. (In France, the translated title is American Nightmare.) Sinister is about creative ego and the cost of chasing fame and fortune over family. Even Paranormal Activity is secretly about a failing relationship. Blum despises the term “elevated horror,” the condescension of it, the snooty insinuation that horror needs any elevation. 

There’s at least one more reason Blum loves horror: because his father—now 92 and curating a Roy Lichtenstein show this fall for Gagosian Gallery—hates it. He’s seen some of his son’s “elevated” ones, but nothing with a number in the title, nothing with a Ouija board. 

To have succeeded so wildly in a field his father doesn’t see the value in, Blum says, feels weird. “It definitely gives me half pleasure,” he begins, “and half, uh, half …” He trails off. He can’t find the right word. 

It’s okay, though. Everyone thought Warhol was junk too. Lots of people still do.

A hedge for Halloween

The Exorcist was the original “elevated” horror movie. It was the first ever to earn an Oscar nomination for best picture. Exorcist: Believer was crafted in its image—a slow-boil family drama about parents watching their children endure something terrible, something they can’t fix.

“I’m part of the generation that saw [The Exorcist] before it was burdened with infinite rip-offs,” Green says. “That’s very different than showing it to an audience of 25-year-olds who’ve never seen the film.” All they’ve seen are the rip-offs. 

Blum admits he’s nervous. Test screenings were all over the place. “The weight of the title is daunting,” he texted me a week after our lunch. “There is no version of a new Exorcist where I’d feel great. I felt great about M3GAN. Stakes were lower. New IP. Etc. … Exorcist is a heavy lift.”

Fortunately, Blum has seen this movie before. He’s not the guy who’s going to go check out that sound in the attic with only a rolled-up magazine in his hand. 

Even if the worst should come to pass, even if Exorcist: Believer shows up dead on arrival, he has a backup plan. The next Blumhouse/Universal production, and also very possibly its next billion-dollar franchise, opens in theaters on Oct. 27, just in time for Halloween: Five Nights at Freddy’s

Based on the cult video game of the same name, Five Nights at Freddy’s, or FNaF (“fnaff”), as fans call it, takes place in a dilapidated restaurant arcade for kids (think Chuck E. Cheese) where a quartet of creepy animatronic robots (think Teddy Ruxpin) come alive at night and slaughter anyone stupid enough to go inside. The video game title produced five sequels before its creator, Scott Cawthorn, pulled the plug. 

The movie is based on the original game, in which a new security guard discovers what he’s gotten himself into. Blum tried to make it for years, and went through nine directors until he found someone Cawthorn didn’t think would ruin his creation (Blumhouse veteran Emma Tammi). The whole company thought Blum was nuts for sticking with it. 

The FNaF movie is one of those cultural phenomena that either you know nothing about, or you’re counting the days until opening night. “People are more rabid about Five Nights at Freddy’s than anything I’ve ever worked on,” Blum says. 

The movie is expensive by Blumhouse standards, north of $20 million, a big chunk of which went to Jim Henson Studios for the animatronics. 

But Blum is already out way ahead before the movie even opens: He declines to share precise figures, but he says the film has more than made back its production costs just from the sale of its streaming and theatrical distribution rights. 

In other words, it almost doesn’t matter how good the film is. (It looks great.) Five Nights at Freddy’s is going to be a hit.

The killer has struck again. 

This article appears in the October/November 2023 issue of Fortune with the headline, “Hollywood is broken. The king of low-budget horror has the fix.”