How Microbudgets Became the New Tentpoles

"Ouija" goes from $140 million to $5 million as studios chase the next "Chronicle" or "Paranormal."

How big is the trend toward tiny-budget movies? Just as Warner Bros.' teen-party pic Project X, made for $12 million to $15 million, opened in February to $21 million at the box office, the studio greenlighted a $10 million thriller from producer Roy Lee and his new low-budget division, Primal Pictures. Fox then threw into development a sequel to its $12 million sci-fi hit Chronicle, which has grossed about $112 million worldwide. And reality TV producers Dan Cutforth and Jane Lipsitz have been hired to make Katy Perry's 3D concert movie at Insurge, Paramount's low-budget label.

Just three years ago, studios were shying away from small-budget horror and genre films to push for bigger and bigger tentpoles. But now, "studios are seeing that these low-budget movies can succeed and be made at a fraction of the cost," says Lee. Universal, for example, has a rich new first-look deal with Blumhouse, run by producer Jason Blum, who pioneered (with Paramount's Adam Goodman) microbudget projects with the Paranormal Activity movies. Universal and Blum recently wrapped their first project, Vigilandia, and are in production on NSFW.

Universal also reconceived Ouija, its adaptation of the Hasbro board game, from a $140 million adventure movie to a Blum-produced $5 million thriller. "They are not slate drivers, but they can augment it," says Universal co-chairman Donna Langley of the new wave of cheapies. Blum's movies cost less than half of some low-budget efforts. They don't use trailers; hair and makeup is done in available bathrooms. "It hearkens back to the years of Roger Corman," says Langley, referring to the B-movie king of the 1960s.

The financial exposure for studios on these films is minimal, with producers and actors taking backend deals (the Paranormal producing team is said to have made tens of millions from the franchise). That potential upside attracts actors such as Vigilandia star Ethan Hawke and directors such as Joe Johnston (Captain America), who is tackling NSFW, to work on movies they normally would shun. At the same time, they provide a farm league for new talent: Josh Trank, who made Chronicle, is attached to direct Venom, a Spider-Man spinoff at Sony, while doors are opening for Nima Nourizadeh, the helmer of Project X.

At least so far, young audiences who have grown up with reality television don't seem to mind the microbudget film aesthetic. Says Fox co-chair Tom Rothman: "An audience doesn't care about what a movie costs. It cares about how it makes them feel."