AFM: The Horror Genre Emerges as Indie Industry’s Unlikely Savior

Ryan Olbrysh

From blockbuster slasher pics like 'Halloween' to art house freak-outs like 'Mandy' (and the box office juggernaut that is Blumhouse), the blood-soaked thriller has become one of the most surefire bets for risk-averse international dealmakers.

It’s a scary time for independent film.

Business models that endured for a generation have been hacked and slashed, leaving the floors of the American Film Market bloody with the remains of once-great movie companies. The butchering of the home-video market has been particularly brutal, leaving many in the industry wondering if AFM could survive the attack or if the world’s largest film market would inevitably be reduced to a half-dead, shuffling zombie version of its former self. Ironic, then, that horror films would emerge as the market’s, and the indie industry’s, unlikely savior.

Horror has always been at the bloody core of AFM — from the high-end respectability of Blumhouse franchises like The Purge and Creep to the $50,000 digital quickies with gory posters and pun-tastic titles targeting the straight-to-VOD market. But while AFM’s other mainstays have weakened — action films can be a tough theatrical play, star-driven dramas can no longer count on global TV sales — horror has gone from strength to strength. The genre has found a market at every budget level and with every demographic. Studio-released chillers — A Quiet Place ($339 million) and The Nun ($364 million) — are delivering nine-digit returns worldwide. 

Spooky features with art house pretensions — Toni Collette starrer Hereditary, Mandy with Nicolas Cage, Luca Guadagnino’s Suspiria remake — are wowing critics. And low to no-budget fare like slasher sequel The Strangers: Prey at Night and Steven Soderbergh’s psycho-thriller Unsane are delivering multiples on their production investment.

The rising horror tide has been a boon for producers and sales companies across the spectrum. "Things have really begun to change. We’ve seen distributors going from revenue sharing to paying real minimum guarantees for films. We’re seeing proper theatrical releases for films that would have been straight-to-VOD just a few years ago," says Miguel Govea, managing director at U.K.-based production and sales outfit Alief, which recently inked a pair of domestic deals for Venezuelan supernatural chiller The Whistler and Brazilian demon drama Our Evil with U.S. indie distributors Uncork’d and Dark Star Pictures.

"In the past three to four years, we’ve seen a real resurgence in theatrical distribution [for horror films] from new companies that really know their target audience," says Govea. "There’s a real appetite for horror films that aren’t typical ghost stories or slasher stories but have a strong character arc or are heavily art-directed or have some kind of a twist."

For art house or foreign language horror, Govea notes, the route to market is old school. To attract attention and generate sales, producers and sales agents rely on strong critical reception and word-of-mouth from a reputable festival with a good genre reputation — such as Fantastic Fest in Austin, Sitges in Spain and the Midnight Madness sections of Cannes and Toronto. Buyers then do a traditional rollout, usually involving a small theatrical release followed by video-on-demand and even physical home entertainment. "The Blu-ray business is booming again for certain kinds of horror," says Govea. "Fans are willing to pay money to own these movies."

The alternative, of course, is to do a worldwide rights deal with Netflix, which typically pays a $250,000 flat fee for low-budget horror, often enough to cover a producer’s costs with a small profit. But that digital market has largely dried up as Netflix buys less, preferring to make its own scary movies in-house. On the extreme low-end of the scale, there is a business for quick and dirty horror that recoups its entire investment online. 

"There’s a consistently strong horror market among digital users," says Gregory Hatanaka, president of Cinema Epoch, whose AFM catalog includes Nun, a shameless ripoff of New Line’s The Nun. "If you make a horror film that looks decent and the first five minutes are visually strong, you’re going to tap into that market no matter what you do. The question is, what do you make it for and what’s the profit? But these days with digital, you can make a good-looking horror for about $50,000, and it’ll look strikingly good."

But Julian Richards, of U.K.-based horror specialists Jinga, notes as well that digital platforms are "slightly more conservative" than the old home-video market and exclude much of the hard-core horror so beloved by the genre’s die-hard fan base. "There is the danger that the digitalization of horror will be its undoing," Richards says. "To really make a difference with horror these days, you need something that is going to do theatrical business. You don’t need stars, you don’t need a big budget. But you do need to get it into theaters."

Having a hook is key for theatrical play and helps explain the current fad for art house horror. Films like Hereditary, Mandy, Suspiria and The Babadook can be crossover titles, attracting audiences that normally wouldn’t be caught dead in a slasher movie.

"What art house horror tends to do is bring something different to the occasion," says Richards. "Because it’s exotic, it can cross over and carry a limited theatrical run in certain territories." He sites Coralie Fargeat’s French title Revenge or Venezuelan supernatural drama The House at the End of Time as examples. Foreign-language titles, because they can tap local subsidies and soft money, often have higher budgets than U.S. indie horror films. AFM titles like Armando Bo’s Animal, about an Argentine man whose attempt to secure a black market kidney transplant destroys his family; or the German eco-feminist zombie movie Endzeit: Ever After, which Picture Tree International is selling, are further examples of horror’s new cosmopolitan bent.

But as with all indie filmmaking, the key with horror is getting the numbers right. "When filmmakers come to me and say, 'I’m making a horror movie for $1 to $2 million,' I tell them, 'I hope you realize you’re going to lose 70 percent of that,'" says Richards. "If you want to make money, you can only really spend about $300,000. The rest has to be tax relief and soft money. Otherwise, you’re in trouble."

This story first appeared in The Hollywood Reporter's Nov. 2 daily issue at the American Film Market.