Investing in Film

Investing in Film

It’s spooky movie season again! Halloween is days away, and “Goosebumps,” “Crimson Peak” and the sixth film in the indefatigable “Paranormal Activity” franchise are in theaters now. Horror movies get nowhere near as much draw at the box office as the big-time summer blockbusters or action/adventure movies — the horror genre accounts for only 3.7 percent of the total box-office haul this year — but there’s a huge incentive for studios to continue pushing them out.

The return-on-investment potential for horror movies is absurd. And, Investing in film is massive.

For example, “Paranormal Activity” was made for $450,000 and pulled in $194 million — 431 times the original budget. That’s an extreme, I-invested-in-Microsoft-when-Bill-Gates-was-working-in-a-garage case, but it’s not rare. And that’s what makes horror such a compelling genre to produce.

I looked at data for 202 horror movies that were released between 1999 and 2014 and were listed on The Numbers and OpusData.1 For comparison, I also pulled 180 films in the romantic comedy genre and 338 action films.2

Then I figured out how many times a movie made back its budget over again.3 So any film that made money had a multiple4 higher than zero, and a movie that made back its budget and not a dollar more would get a 1. A movie that doubled its budget would have a 2 and so on.

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One in 5 horror movies in our set made its budget back at the box office 6 times over or more. One in 10 made its budget back 17 times over or more. And it keeps going! While 1 in 20 action movies made 6 times its budget or more, 1 in 20 horror movies made back 38 times its budget or more.

And this isn’t a mere function of how many theaters the movies are being shown in; horror movies and rom-coms have similar distributions, and save for one very special case — “My Big Fat Greek Wedding” (2002) was made for $5 million and made it back 75 times over — romantic comedies don’t have the same long tail that horror films do.

In short: There were 28 horror movies out of the 202 we analyzed from the past 15 years that made back more than 10 times their budget. There were only six romantic comedies out of 180 and only four action movies that pulled off the same return on investment.

Why is this?

Namely, horror movies are relatively cheap to make — the genre doesn’t demand that a big-name star get hacked to pieces and will accept any replacement-level ingenue as a lead — and they have the opportunity to explode in popularity. The ur-example of this is “The Blair Witch Project” (1999), which pretty much kicked off the contemporary era of make-it-cheap-and-hope-for-the-best horror movies. It was followed a decade later by the first “Paranormal Activity” (2009), which to this day is one of the single most successful films ever based on return on investment.

The intensely visual and emotional filmmaking also translates well across borders, which is one reason that it’s a highly international genre both at the box office and when it comes to cross-cultural trading. Horror movies that do well in the U.S. don’t need a ton of retooling — something that is hardly the case for major blockbuster re-releases and films that live and die by the nuance of the script. When you look at some of the biggest horror titles in the post-”Blair Witch” world — “The Ring” (2002) and “The Grudge” (2004) immediately come to mind — they’re imports, remakes of Japanese films, and relatively seamless ones at that. A scary girl that crawls out of the television is scary no matter where the TV is.

After all, if there’s anything universal about the human condition, it’s fear, and a scream is the same in every language.