Introduction
When speaking of the most impressive movie of the first half of 2017, Get Out was the shocking dark horse that surprised audiences. The movie’s success brought an independent film production company, Blumhouse Productions, in front of a global audience. Blumhouse Productions, founded by Jason Blum in 2000, is located in Los Angeles. This company features “micro-budget” films, and specializes in horror and thriller films. For example, Insidious (2011), produced with a $1.5 million budget, earned $97,009,150 worldwide (Box Office Mojo, 2017). Blumhouse has earned a high reputation from audiences because of its high quality performances in the horror genre, and from directors and screenwriters because it encourages them to generate great ideas in their minds and translate them into films. Competitors and critics admire Blumhouse because of its business model: make high-profit and high-concept films with low budgets (Lang, 2017).
Photo by Danny Liao
Assets
Partnership with powerful distributers are one of the most important assets that Blumhouse has as an independent production company. In 2012, it signed a first-look deal with Lionsgate TV (Andreeva, 2012). In 2014, Blumhouse signed a 10-year first-look agreement with Universal (Cunningham, 2014). These two deals made sure its products are backed up by the powerful distributers. Also, Blumhouse started to expand in 2014 when, in September, it established BH Tilt, the subsidiary that creates movies released on multi-platforms and also focuses on the acquisition, marketing and distribution of horror movies (Fleming, 2014). Later in November 2014, Blumhouse extended its hand into literature, launching Blumhouse Books to create original horror novels (Wolfe, 2014).
Blumhouse Productions keeps a friendly relationship with talent, such as directors and screenwriters. Although Blum gives writers and directors relatively low salaries, they are still attracted by the freedom to develop stories (Bunch, 2017). Blumhouse understands how important the talent is to its films; it believes that content is king. For example Jordan Peele, the director of Get Out (2017). His stories had been rejected by many production companies, but Blum saw the potential of this concept and worked with him to make it a big hit (Guerrassio, 2017).
Universal Pictures
Business Model
Blumhouse Productions’ business strategies include low budgets and high-quality content. Blumhouse tries to keep its production budgets between $3 and $5 million. This number was thoroughly considered and discussed, it was not just an unrealistic goal (Lincoln, 2015). Blum explained in a panel at Produced By Conference 2015: “That amount is about what we are able to recoup on the movies if we don’t get a wide release. In a worst case scenario, we break even and maybe lose a little money but not very much, and everyone gets paid … That budget is reverse-engineered to thinking that if the movie isn’t in wide release, at least we get our money back and can keep our doors open.”
Blumhouse divides the budget of a film into three main parts, location, character, and special effects. These three parts build a triangle, each part affects the two others (Yakimchuk, 2017). The team has to make decisions: if it wants more characters with lines, which means higher costs, then it may not be able to shoot in a luxury house or add special effects to the movie. That’s why Blum asks his team to focus on the content of the story, not the fascinating but costly, special effects or animation. Also, Blumhouse prefers location shooting rather then building fake houses in a studio. Real locations cost less than ones built in studios. Also, real location can help actors focus on these stories (Puchko, 2013). And, as most production company’s do, Blumhouse works with professional casting agents to find actors who fit the story perfectly. It usually prefers actors or actresses who are not so famous and do not demand high salaries. “We don’t need stars for our movies,” Blum said. Or, Blumhouse convinces a famous actor to sign a back-end deal (Nicholson, 2015).
Before Blumhouse green lights a movie, it examines the budget and modifies the script again and again, to make sure the concept is great and the shots are executable within budget. Blumhouse always keeps promoting low budgets, some movies don’t even have trailers. This strategy meant some of its films slipped under the radar, failing in the box-office. However, after Blumhouse partnered with Universal, Blumhouse made up this disadvantage (Bradley, 2017).
Lastly, Blumhouse Productions concentrated on producing the horror genre and became an iconic brand of horror films. All these strategies build up a profitable system and a business model that attracts talent and other companies eager to work with or invest with Blumhouse.
Revenue Model
Blumhouse Productions’ main product is film and it produces TV series and documentaries as well. As a production company, Blumhouse is looking for distributors worldwide to release its products to make money. For example, Get Out (2017) earned $175,484,140 in the domestic market and $76,950,110 in foreign countries – $252,434,250 in total (Box Office Mojo, 2017). When Blumhouse Productions can’t find distributors to release its products, or for the products that don’t perform well in theaters, it turns to online platforms, such as Netflix, to release these products and recover its costs (Lincoln, 2015).
Moving Forward
In January 2017, Tim League, a producer and the founder of Alamo Drafthouse, and Tom Quinn, founder of RADiUS-TWC, created the film distribution company, Neon (Winfrey, 2017). This new brand builds partnerships with different companies, including Universal Pictures Home Entertainment and Hulu. On September 7, Blumhouse Productions and Neon announced they would run BH Tilt together. Blumhouse is attempting to get more involved in social media, and this new partner may be a great help. League’s entrepreneurial and producing experiences and Quinn’s innovative thoughts of media distribution will allow Blumhouse to target its audience more effectively. Critics are looking forward to Neon’s ability to lead Blumhouse to create new innovative strategies (Galuppo, 2017).
References
Andreeva, N. (Februrary 14, 2012). Feature Producer Jason Blum Signs First-Look TelevisionDeal With Lionsgate. Retrieved from http://deadline.com/2012/02/feature-producer-jason-blum-signs-first-look-television-deal-with-lionsgate-231013/
Bunch, S. (March 13, 2017). Blumhouse Productions Is Handily Winning 2017 Thus Far. Retrieved from http://freebeacon.com/blog/blumhouse-productions-is-handilywinning-2017-thus-far/
Box Office Mojo. (n.d.). Box office for Insidious. Retrieved from http://www.boxofficemojo.com/movies/?id=insidious.htm
Box Office Mojo. (n.d.). Box office for Get out. Retrieved from http://www.boxofficemojo.com/movies/?id=blumhouse2.htm
Bradley, R. (May 11, 2017). The Scarily Profitable Hits of Jason Blum. Retrieved from https://www.nytimes.com/2017/05/11/magazine/the-scarily-profitable-hits-of-jason-blum.html?mcubz=1
Canal, E. (April 13, 2017). How This Small Production Studio Is Turning Dirt Cheap Budgets Into Millions at the Box Office. Retrieved from https://www.inc.com/emily-canal/blumhouse-productions-get-out.html
Cunningham, T. (July 20, 2014). Blumhouse Signs 10-Year Production Deal With Universal Pictures. Retrieved from http://www.thewrap.com/blumhouse-prods-signs-10-year-production-deal-with-universal-pictures/
Dr. Pseudonymous. (March 9, 2017). Scary Numbers: Blumhouse’s String of Hit Horror Movies. Retrieved from http://www.senselesscinema.com/2017/03/scary-numbers-1.html
Fleming, M. Jr. (September 9, 2014). Blumhouse Launches Multi-Platform Arm BH-Tilt. Retrieved from http://deadline.com/2014/09/blumhouse-launches-multi-platform-arm-bh-tilt-831985/
Galuppo, M. (September 7, 2017). Neon Partners With Blumhouse on Distribution Label BH Tilt. Retrieved from http://www.hollywoodreporter.com/news/neon-partners-blumhouse-distribution-label-bh-tilt-1036240
Guerrassio, J. (March 1, 2017). How the company behind 2 of the year’s biggest movies is blowing up the Hollywood playbook. Retrieved from http://www.businessinsider.com/blumhouse-productions-get-out-split-2017-2
Lang, B. (February 26, 2017). Will ‘Get Out’ Make Blumhouse the Pixar of Horror Filmmakers. Retrieved from http://variety.com/2017/film/box-office/get-out-jordan-peele-blumhouse-pixar-horror-1201996703/
Lincoln, R. A. (May 30, 2015). Blumhouse And The Calculus Of Low Budget Horror –Produced By. Retrieved from http://deadline.com/2015/05/blumhouse-panel-produced-by-conference-1201435034/
Nicholson, A. (October 19, 2015). Can Budget-Slasher Jason Blum Prove the Way Hollywood Makes Movies Is Horrifyingly Wrong. Retrieved from http://www.laweekly.com/arts/can-budget-slasher-jason-blum-prove-the-way-hollywood-makes-movies-is-horrifyingly-wrong-6176088
Puchko, K. (2013). Insidious: Chapter 2 Producer Jason Blum Admits Horror Haters Fuel His Drive. Retrieved from http://www.cinemablend.com/new/Insidious-Chapter-2-Producer-Jason-Blum-Admits-Horror-Haters-Fuel-His-Drive-39384.html?story_page=1
Winfrey, G. (January 13, 2017). Tom Quinn and Tim League Brand New Distribution Company ‘Neon’ Just In Time for Sundance. Retrieved from http://www.indiewire.com/2017/01/tom-quinn-tim-league-distribution-company-neon-sundance-1201768774/
Wolfe, C. (November 2, 2014). Blumhouse Production Announces Blumhouse Books. Retrieved from http://nerdist.com/blumhouse-productions-announces-blumhouse-books/
Yakimchuk, N. (April 10, 2017). Small Budget? Producer Jason Blum’s 5 Rules for Lean Filmmaking. Retrieved from https://www.premiumbeat.com/blog/jason-blum-rules-on-lean-filmmaking/