Box Office Sabermetrics: Blumhouse’s VOD Gamble on ‘Paranormal Activity: The Ghost Dimension”

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The final chapter of the Paranormal Activity franchise, Paranormal Activity: The Ghost Dimension, was released in theaters on October 23rd. My friend and I planned on catching a late showing the previous night, but to our dismay discovered it wasn’t actually playing anywhere near us. How could the final film in a cash-printing horror franchise not be in even our nearest theater? How does that happen?

Blumhouse, the production company behind the franchise and other low budget horror hits, is making a surprisingly bold move by putting the film on VOD just weeks after debuting it theatrically. When they announced this, several theater chains decided that they would not screen the film, fearing that VOD business would cut into their profits. This caused a significant drop in the amount of theaters that The Ghost Dimension would play in, which would also cause a significant drop in the amount of money that they would stand to make. That’s all bad news, but this didn’t sway Blumhouse from their ultimate goal with the film. The Ghost Dimension could possibly serve as a rare example where the economic victory isn’t won at the box office, but in the living room.

Theatrically, The Ghost Dimension is last in pretty much every category of box office denomination in the history of the found-footage franchise. It had the lowest domestic opening weekend with just $8 million, the second lowest amount of theaters for a wide release debut in the franchise (the original hit the wide market at 760 theaters) with just 1,656 theaters. Right now, two weekends into release, it sits at just $13 million domestically. It is by all accounts the biggest failure in the lucrative franchise, but the strange thing is, it’s all perfectly fine and all part of the plan.

The VOD market has been the biggest market for independent films this decade, with independent theaters on the decline, the best way to reach independent audiences is in their own homes. However, VOD still isn’t recognized by larger studios as a viable way of business. Results for this format rarely get released to the public; it’s almost as if it’s treated like it’s not “real money”. Blumhouse, over the past few years, has started to edge their way into the VOD market with their sub-label Blumhouse Tilt. This was largely a dumping ground for generally bad films, but the label has also been home to some of Blumhouse’s highest quality works like Joe Carnahan’s Stretch and Patrick Brice’s Creep.

However, as they’ve started to get better titles on the label, they’ve also made a strong effort to get bigger titles on the label. Earlier this year, they scooped up Eli Roth’s The Green Inferno from post-production hell and put it out in a similar release to that of The Ghost Dimension: small theatrical window, endless possibilities on streaming and rental. They broke even on The Green Inferno theatrically, scoring $7 million off a $5 million budget. That’s not taking into account how much they’ve made off of VOD though. It’s likely however that VOD sales put the film into a profit.

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They hope to recreate that effect with The Ghost Dimension, but on a much larger scale. The film has a built in audience, with the Paranormal Activity franchise one of the most profitable series of films around. Two of the films have hit $100+ domestically, and four of them have grossed well upwards of $100 million worldwide. And it should go without saying, but the highest budget of any of them is $5 million. It’s a model that has proven profitable for Blumhouse time and time again, buying low and selling high, but sees it’s largest payouts with the Paranormal Activity franchise. So why take the hit for a sure thing like this with all that money on the table?

Because it is a sure thing. The low budgets on Blumhouse films allow them to take the hit without anybody losing their jobs. Even if the film only had its $13 million domestic return to show for it, everyone at Blumhouse could still pay their bills, they’ve already made a profit on the film. Add in foreign markets that have tripled the domestic return and it sits on a comfy and cozy $51 million worldwide gross currently. That’s still a lot of money and a lot of profit, even if it stands well below the regular mark of returns in the franchise. With that large a profit, they can lend the name power in order to increase their presence on VOD, sacrificing their biggest cash cow in the name of progress.

If The Ghost Dimension does well on VOD, it will hopefully begin the incremental changes to get Hollywood to consider VOD for more of their films. In 2009, Blumhouse begin a process of business and filmmaking that would prove to be a game-changer in the industry, and in 2015, they’re hoping to change the industry again.

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