Jason Blum's frighteningly successful cinematic formula argues that there's another way to do business: Think small.; Credit: Photo by Danny Liao

If you want to meet the smartest man in Hollywood, head east from Grauman's Chinese Theatre until the Walk of Fame fades into a barren stretch of dental clinics and Filipino restaurants and enter a tasteful, almost camouflaged midcentury office that, until recently, was the headquarters of Cat Fancy magazine.

Ask for Jason Blum and, like Bloody Mary bursting from a mirror, he appears. “Buddy!” Blum shouts, whether it's your first meeting or your 30th. Then the boyish 46-year-old horror filmmaker — the producer of five of the 10 most profitable hits in the last five years, plus 2009's Paranormal Activity, the most profitable movie in history — beckons you to follow as he bolts down an eerie, lamp-lined hallway, past a dozen of his buzzing employees, to his office, where the remains of catnip mice have scattered for the new owner's toy: a giant ax.

“I'm going to give you a ride in the van!” Blum says, and seconds later, you're out his private glass door and back outside, blinking in the sun. He slides open the door of a 2005 white Chevy Astro and decides where you should sit, and his assistant speeds off. It's been three minutes since you've arrived at Blumhouse Productions.

Blum, a fast-moving, fast-talking native New Yorker, has yet to embrace Los Angeles. He has, however, acclimated. The van is Blum's adaptation to traffic: a mobile office with bamboo window shades (“I don't like the way L.A. looks, so I have it all covered”), a flatscreen monitor and a keyboard Velcroed to an ergonomic lap pillow. He bought the van in 2006, used, and transformed it on the cheap. A printer rides shotgun.

The Chevy has the spirit of his low-budget horror movies. It's a little grimy and a lot brilliant. “Blumhouse Electric,” an apt description of the man himself, is painted on the sides. Instead of a luxury SUV flaunting his financial success — $2 billion in global box office receipts from 22 films, with an average cost of $4.5 million each — Blum travels Hollywood disguised as a repairman. Which he is. The current model of expensive, high-risk blockbusters is broken. Blum is the brainiac who can fix it.

When Ouija, Hasbro's $105 million follow-up to Transformers and G.I. Joe, was frozen in development hell, Blum raised a sledgehammer and volunteered to make it for $5 million. “We just started with the name and redid it,” he shrugs. His Blumhouse version of Ouija, released in 2014, made $102.5 million. Instead of a loss, he earned the studio's money back 20 times over.

After the Jennifer Lopez thriller The Boy Next Door was DOA at a projected $35 million budget, Blum offered to get it done for $4.2 million — another hit to add to his fattening wallet alongside Sinister, The Purge, Insidious, The Visit, The Gift and his annual cash cow, Paranormal Activity, whose sixth and final installment, Paranormal Activity — The Ghost Dimension, hits theaters on Oct. 23.

The same day, Blum is releasing Jem and the Holograms, which director Jon M. Chu had originally pitched as a perilous $100 million spectacle. “$20 million for me is like Star Wars!” exclaims Blum. He gave Chu $5 million. “The model is, really, if everything goes wrong, we will recoup.”

An average studio movie costs $75 million, plus another $30 million in marketing. That model is: Go big or give up on making a fortune in China. As a result, audiences moan that Hollywood has become too glossy, too bland, too costly, too safe. There are too many superhero movies and too few of everything else. Midpriced films have vanished, those solid romantic comedies and middlebrow crowd-pleasers that kept adults happy for decades.

“$20 million for me is like Star Wars!” —producer Jason Blum

Blum's frighteningly successful formula argues that there's another way to do business: Think small.

Hollywood is intrigued, and it has two questions for him: How does he make movies so cheaply? And can other producers — and other genres — do the same?

Blum doesn't look like a horror ghoul. Clean-cut and fit, with a shag of sandy hair, he resembles a young Robert Redford. He's attractive enough to star in his own movies, which, more often than not, are about men like him: charismatic fathers with a surplus of ambition. (Blum and his wife, Lauren Schuker Blum, a journalist for The Economist, had their first daughter, Roxy, in April.)

His 10-year first-look deal with Universal empowers Blum to green-light any movie budgeted at less than $5 million as long as it's horror, thriller or sci-fi. If Universal believes the finished film is worth the jumbo marketing costs, the studio releases it on 3,000 screens. If not, between VOD rentals and overseas deals, it will at least recoup its money.

The deal affords Blum the freedom to trust his gut. (Meanwhile, Universal is having its most profitable year in history.) Blumhouse has 16 films in different stages of production. “Gives me a headache,” Blum mock-sighs. This, he swears, is his limit. Yet his crowded life is peculiarly calm. Meetings are short, decisions are quick. To prove it, last month he fired off a fast tweet: “Heard an awesome pitch today. We r going to make the movie. Shooting in Jan. All other details TOP SECRET :)”

“I'm very efficient,” Blum says. He starts work at a reasonable 8:30 a.m., three hours after Jeffrey Katzenberg gets cracking, and finishes at 6 p.m. to get home to the baby. Right now it's the middle of the day, but rather than continually check his phone, Blum exudes Zen — or a modern version of Zen, cracking open can after can of green tea. He seems more frightened of gaining weight than of falling behind at his job. Asked on Reddit what scares him, he quipped, “Earthquakes and carbs.”

Blum, an only child, has always been uncommonly energetic. In eighth grade, he was voted Most Active. The next year, he transferred to a snobby boarding school. “I was not even in the loser group,” Blum says. “I was below that. It's funny now, but it was very painful.” Junior year, he convinced his parents to send him to France, where he took up cigarettes and black eyeliner.

His rebellion lasted through college at Vassar. “Being odd was really cool,” Blum says. He'd never loved horror movies — he was scarred from watching Friday the 13th too young — but a Hitchcock class pushed him to reconsider genre films. For his final paper, Blum parsed the difference between an art-house chiller and a goofy action flick. Blum cackles, “The title of the paper was, 'Rebecca isn't Rambo.'”

Senior year, his roommate was future indie darling Noah Baumbach. They made movies together, pretentious black-and-white flicks about mysterious women with scars. “They were very, very complicated,” Blum says. “They were terrible. Noah's were more angsty. Mine, I always tried to bite off more than I can chew.”

After graduation, Blum and Baumbach moved to Chicago and split a $500 one-bedroom apartment. Blum paid rent by selling cable TV subscriptions. Both fixated on funding Baumbach's first film, Kicking and Screaming. Blum persuaded Steve Martin to write a letter applauding the script, stapled it to the drafts and hoofed the project around town. When the film finally came together, however, the other financiers pushed out the newbie producer, an experience Blum told Bret Easton Ellis on a podcast was “very hurtful … a big, big, profound disappointment.”

The friendship took a hit. Blum moved to New York and sold real estate. One night, he and a date met up with her friends at a diner. Among them was then–21-year-old actor Ethan Hawke, two years Blum's junior, who had just finished Dead Poets Society and White Fang and was launching an off-Broadway theater company called Malaparte.

“I asked what he wanted to do with his life,” Hawke recalls. Blum said he wanted to be a producer. “My clan of people, everybody wanted to be an actor, a writer, a director,” Hawke says. “Why the hell do you want to be a producer?” he asked Blum, who replied: “I want to make shit happen.”

Hawke was intrigued. “So many people get into that job after trying to do something else. As a young man, that's all he wanted to be. And I thought, 'I want to get to know this kid.'”

Blum became the producing director of Malaparte. He was tireless. The theater was never allowed to go dark. On off nights, he'd host rock shows. If a performance hadn't sold out, he'd go down to Times Square and hand out fliers, bellowing, “Don't go see some Broadway show! Come see a new play by an American playwright! Only $10!”

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“The trick to Jason's success in the theater, and now, is just wild enthusiasm,” Hawke says. “We were the only nonprofit theater company I ever heard of that finished in the profit.” Malaparte's wrap parties were legendary. Blum would buy a keg, invite hundreds of people and put them to work cleaning dressing rooms, swapping out sets, moving equipment. “A little bit like Tom Sawyer getting people to paint his fence for him,” Hawke laughs. “They were pretty loaded by the time it was done.”

Then Blum got a call from the head of Arrow Films, whom he'd met flogging Kicking and Screaming. Arrow hadn't been interested in the script, but it was interested in Blum. At 24, he became the company's vice president of acquisitions, and four years later ascended to the indie big leagues as the co-president of acquisitions at Miramax under Harvey and Bob Weinstein. During his five-year tenure, Miramax released Trainspotting, Sling Blade, Swingers, The English Patient, Good Will Hunting, Jackie Brown, Life Is Beautiful and Shakespeare in Love. However, the purchases Blum points to as his are less iconic: The Others, Smoke Signals, A Walk on the Moon, The House of Yes.

Miramax was intense. Harvey Weinstein wielded his Oscar statuettes like a club, dominating his directors and smashing disagreements. Blum was so anxious to please Harvey that, at Sundance 1999, he got ensnared in an overhyped bidding war for that year's hot comedy, Happy, Texas. Miramax won the film for $10.2 million, beating out Fox Searchlight, Paramount Classics and New Line Cinema. Happy, Texas earned $1.9 million at the box office — an embarrassing loss.

That same Sundance, Blum passed on a $60,000 flick called The Blair Witch Project. Artisan Entertainment snatched it up for $1.1 million. By the end of that year, Blair Witch had grossed $248.6 million. Soon after, Blum quit his job.

At 30, he moved to Los Angeles and rebooted. He had most of the phone numbers that mattered in town but little else. “At Miramax, I would have thought it was impossible to work without an assistant and a car service,” Blum told Screen International in 2003, “but now I love slugging it out at Kinko's.”

Blumhouse Productions set up offices on the Paramount lot, and Blum pitched the studio a variety of midpriced movies: a thriller about an oil coup in Equatorial Guinea; an adaptation of The Ice Man: Confessions of a Mafia Contract Killer; a comedy about basketball in Mexico. “I longed to be mainstream,” Blum told W magazine. But none of his projects was green-lit. Shit wasn't happening.

“He used to get sick of the independent world, because he'd work so hard, and then no one would see the movie,” Hawke says. But at least those movies had been getting made.

Blum had spent 15 years in the movie business and still felt like a misfit. What now?

Then he saw a $15,000 found-footage horror flick called Paranormal Activity. It reminded him of Blair Witch, his white whale. Writer-director Oren Peli had already sold the distribution rights for $150,000. Blum urged him to call off the deal. This film could be huge, if only a studio would trust him. He showed it to executives. They passed. He kept showing it: 10 times, 20 times, 70 times. Blum flogged the film for two years.

“It was no magical thinking on my part,” he says. “It was simply watching an audience respond to the movie — they lost their minds.” He dove into producing his first major studio film, the $48 million Dwayne “The Rock” Johnson fizzle The Tooth Fairy, but he never abandoned his micro-budget passion project. Finally, Paramount said yes. Paranormal Activity made $193.4 million. Blum had found his calling.

Jason Blum's contrarianism — his fuel — comes from his dad. A former New York furniture salesman, Irving Blum moved to Los Angeles when he was 27, three years younger than his son would be when he moved to L.A. four decades later. Irving Blum bought the Ferus Gallery on La Cienega, the soon-to-be center of contemporary art in California, for $500. He was broke. A few years later, on a 1962 trip home to Manhattan, Irving met Andy Warhol, then unknown, and convinced him to display his full set of 32 Campbell's Soup can paintings at Ferus. It was Warhol's first West Coast show. Only six canvases sold.

“The response to the soup cans was the same as the response to Paranormal Activity,” Blum says. “Everyone thought it was a joke and made fun of it.” But Irving was a believer. He bought back the six soup cans from their new owners, so that he could acquire the series as a complete collection. Warhol charged him $1,000, which Irving paid in 10 monthly installments of $100. In 1992, he sold the paintings to the Museum of Modern Art for the bargain rate of $15 million.

“It took the soup cans 30 years for people to know their value,” Blum says. He beams. “It took Paranormal Activity three.” Irving Blum made sure his son remembered to trust his instincts. His full name is Jason Ferus Blum. “A little strange,” Blum admits. “It's like naming my kid Blumhouse.”

Yet his father's most important lesson arrived even earlier. Before the Ferus Gallery skyrocketed, Irving agreed to dash off a screenplay — his only one — for a friend and first-time filmmaker named Russ Meyer. Called The Immoral Mr. Teas, it was a trashy lark about a door-to-door salesman gifted with X-ray vision, which allowed him to see women naked. As payment, Meyer offered Irving a choice: $1,500 up front or 10 percent of the profits. Irving was certain the $24,000 film would flop. He took the cash. The Immoral Mr. Teas made $1 million.

After Paranormal Activity became a monster hit, Blum modeled his subsequent films on the Teas template. He'd tried the Hollywood normal of high fees for cast, director and producer, which put the film in debt before a frame was shot. He knew the play-it-safe pressures that followed: scripts written by committee, endless negotiations about how to appeal to Middle America and China, the eternal war between commerce and art. That sucked. Now he'd try the opposite.

Up front, Blum pays himself nothing. His large fee on The Tooth Fairy felt “duplicitous,” he shudders. “It's, like, hypocritical to tell a financier, 'Hey, we're all going to do great, but I need a million dollars to produce.'”

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His directors, writers and actors get union minimums — but they stand to make much more. “When the director is making scale and the actors are making scale, the conversations around the object we're contracting are 180 degrees different than if the director's making a million dollars and this actor's making $100,000 and this producer's making $200,000 and this other producer's making $800,000.” Such pay disparity “just fucks up the balance, as opposed to, we're all on the same team.”

For lead actors, scale means $2,921 a week. Their shoots are short — three weeks, four at most — which means Jennifer Lopez, Blum's leading lady in The Boy Next Door, agreed to a salary around $11,000. As perspective, Lopez's salary for one season of American Idol is $17.5 million.

Technically, Lopez made even less. Blumhouse won't pay for an actor's trailer, which costs upward of $750 a day. Most go without. Lopez rented her own.

Yet if the film makes money, which it usually does, Blum takes 12.5 percent of the first-dollar gross and then splits the rest of the profits with the major cast and crew. On The Purge, Ethan Hawke made an additional $2 million. (“He hates horror movies,” Blum says. “He actually didn't want to do it because he thought the set would be scary.”) On Insidious Chapter 2, Rose Byrne and Patrick Wilson made another $7 million each. “I was initially skeptical,” Byrne says. “You're not going to get paid. But you all want to get it done, so you pitch in and make it happen.”

“We don't need stars for our movies,” Blum insists. His spooky concepts are the draw. Yet the talent he enlists adds a veneer of prestige: Hawke, Byrne, Wilson, Jason Bateman, Juliette Lewis and Rebecca Hall are all Golden Globe–nominated actors. They're not working with Blumhouse for the exposure and certainly not for a mega-paycheck. They're doing it to take a creative risk, or, as Byrne says, “for the love.”

“As an actor, you're protected from so much,” says Joel Edgerton, who directed and starred in this summer's The Gift, which already has made $53 million on a $5 million budget. In standard films, where actors negotiate their full payment up front, they're usually focused on their newest project by the time the film opens. “If it doesn't do well, you're like, 'I feel sorry for those people, but I tried my hardest,'” Edgerton says. “I was never as tangled up in the emotional desire for a movie to succeed or fail as I was with The Gift.”

“Jennifer Lopez adapted because her agent was very forward-thinking,” Blum says. “He said, 'The movies that used to be done, like Maid in Manhattan, those movies aren't really happening. The Boy Next Door would have been a $40 million movie seven years ago. Here's a way we can make that movie.'”

To writers, Blum offers the assurance that, unlike most studio films, his team won't rework their scripts. After all, the one script Blum penned 15 years ago was “terrible.” He vowed to stick to writing checks.

To directors, what Blum offers is even more rare: final cut. He's the anti–Harvey Weinstein — he trusts his filmmakers.

“It's much more like European or independent filmmaking than typical Hollywood filmmaking,” he says.

But first, Blum must get them to agree to his price.

He escorts potential filmmakers to the main lobby, where there's a collection of framed pictures of every Blumhouse director. There's also a mirror in an identical frame. Blum guides directors over and says, “Look here.” (Actually, he has two mirrors at different heights in case someone is short.)

Then he gives them a speech.

“I say, 'You're going to have the final word on everything, but I'm going to have a bunch of ideas. You don't have to follow them.' As soon as you tell a director that, the phone rings in five minutes. They're suddenly insecure. They are desperate for your ideas when they know they don't have to do them. One of the problems with Hollywood filmmaking is that the director spends a lot of energy trying to figure out how they're going to maneuver people to get what they want. When they know they're going to ultimately get what they want, the whole process is a million times better.”

Blum sticks by that promise even if a director is wrong. Like when The Boy Next Door's Rob Cohen had his teen stalker gift Lopez a “first-edition” of the oral epic, The Iliad. Critics jeered the mistake. “We gave him that note!” laughs Blum, “and we got shot down and let the director do what he wanted.”

“He absolutely 150 percent backed up his word,” says Jem and the Holograms director Chu. “He is supportive of the weird vision. He'd be like, 'This is a time where you can do those things. No one's going to stop you. Trust those instincts.'

“Going from a $100 million G.I. Joe to a $5 million Jem and the Holograms is definitely mental whiplash,” Chu adds. “But it gave me a freedom that I didn't have in other movies.”

Freedom just landed Blumhouse a sought-after talent. In July, Blum tweeted a quick wisecrack: “I'd like to do a scary movie with Donald Trump.” Comedian Jordan Peele of the politically provocative Comedy Central smash Key & Peele fired back, “Too late. You've already produced a movie called Insidious.” The next day, Blum tweeted a picture of himself and Peele in his office. Two days after that, Keegan-Michael Key and Peele announced that they were ending their show, and two months after that, Peele broke the news that he'd be writing and directing a horror film, Get Out, for Blumhouse.

Peele's choice caught people by surprise. Blumhouse? Really? What about those five years of Peabody Award–winning attacks on racial stereotypes? In a statement, Peele was adamant that the deal would continue to allow him to showcase challenging comedy.

“Like comedy, horror has an ability to provoke thought and further the conversation on real social issues in a very powerful way,” Peele said. “Get Out takes on the task of exploring race in America, something that hasn't really been done within the genre since Night of the Living Dead 47 years ago. It's long overdue.”

Freedom, it turns out, is priceless.

The van pulls up to Blumhouse Productions' new annex, another quirky real estate pick. This former bank building was most recently a pot shop. “It smelled intense,” says Blum, still grumbling that the contractor tore down the towering pot dispensary sign. “It was super fucking cool, but what can you do?” The bank had left behind a giant vault with a foot-thick door and spinning tumbler, which Blum keeps propped open. (He doesn't know the combination, and a safe cracker charges $15,000.) “The contracts from our movies are in here. Nothing valuable, so we always leave it open,” he quips.

It's lunchtime, and instead of eating out or huddling over individual salads, Blum's employees are feasting on communal piles of take-out food. One corner is splitting a heap of burgers and fries, another a stack of pizzas, a third Taco Bell. Blum speed-walks past a length of bare white cubicles. Taped on one is a printout that reads: “Office of Jordan Peele.” It's the opposite of glamour. Blum is ecstatic. “Is there a sign?! Very good, so he'll be here soon!”

To save money, Blum has rules. He advises directors to cut unnecessary speaking roles. Silent extras average $100 a day. Actors who talk make $500.

Second, most of his films are shot in one location. And nine films out of 10, it's a house.

“Sometimes you feel like you've been in the same room too many times,” admits Paranormal Activity — The Ghost Dimension director Gregory Plotkin, who also edited the last four films in the franchise. He's analyzed the power of a single home setting. “The great thing about it is you start to feel uncomfortable in your own house. You start to question the kitchen, the bedroom, your bed, the doors.” On set, he crumpled the pillows and strewed blankets on the floor. “The idea is to make it feel as real and as lived-in as possible, so you feel like you're there.”

Another cost-cutting goal is to eliminate outsourcing. The two Blumhouse offices and their fluctuating 80 employees comprise a one-stop mini-studio, a unique factory that does everything from development and casting to editing, mixing, color correcting and even special effects.

“Easy stuff,” Blum says. “Hard effects, we still go out.” Not that he likes wasting money on special effects anyway. “The more time a director spends on the special effects, and the stadium and the car blowing up, and the rain and the weather, the movie suffers. What makes a good movie is character, acting, story.”

Blum ignores the conventional wisdom that all horror needs is pert boobs and buckets of blood. He's apathetic about nudity and turned off by gore. “Movies are scarier actually when they aren't gross,” he says.

The largest problem Blumhouse filmmakers have is simply keeping Blum's attention. He can be overextended, distractible, bullish about a project one afternoon, then have it slip his mind until its director gives him a nudge.

Yet the Blumhouse machine is so well oiled that, passing through his looking-glass hallways, the original question gets turned on its head. It's not, “How does he make movies so cheap?” It's “How are other movies so expensive?”

“In Hollywood, the herd mentality is massive,” says Blum. “The reason people don't make low-budget movies is that it's completely not sexy — we're not the cool guys on the block.”

Yet, Blum isn't the first producer devoted to budget pictures. He's just the most profitable. In the 1930s, when studios relied on block-booking double bills, half the pictures were quickie B-movies. Back then, the safest financial bet was low-cost Westerns. Over the decade, as the Depression slowly receded, the average cost of a studio movie rose from $300,000 to just under $1 million. In 1942, RKO producer Val Lewton took aim at that overinflated spending by capping costs at $15,000. His first flick — the nasty, fun, $134,000 Cat People — raked in $4 million. Lewton repeated his success with I Walked With a Zombie and The Leopard Man, and then his studio protector died and Lewton was hustled off the lot.

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In the 1950s, a Detroit kid named Roger Corman made dirt-poor genre movies directed by whoever would say yes. Luckily, Corman got yeses from newcomers such as Francis Ford Coppola, Peter Fonda, Ron Howard, Martin Scorsese, James Cameron and Jack Nicholson. In his conference room, Blum hung a huge Italian poster of The Terror, which Corman directed himself. Star Jack Nicholson was so unknown that the poster reads “Jack Nicholsom.”

“The Corman comparison, it's flattering but actually not accurate, in that his thing was [to] use first-time everybody — 'Jack Nicholsom,' right? We work very rarely with first-time directors. We're more Moneyball-ish. We use undervalued talent.”

In the '80s, Corman was usurped by Cannon Films, run by Israeli cousins Menahem Golan and Yoram Globus. By then, action — not Westerns or horror — was the can't-miss genre, and Cannon cranked out cheap flicks starring Chuck Norris and Charles Bronson, plus occasional oddballs like Breakin' 2: Electric Boogaloo.

“The critics hated them,” says documentarian Hilla Medalia, director of The Go-Go Boys: The Inside Story of Cannon Films. “But Menahem had futuristic eyes.” He was the first producer to buy the film rights to Spider-Man.

Such ambition was hazardous. “There was one year that they produced 47 films,” Medalia says. “Even if you do ultra-low-budget films, how can you possibly produce so much?” Cannon's $17 million Superman IV was a dud. Later, in 1990 Golan squandered $10 million making Captain America, which recouped a mortifying $10,173.

But Golan was prescient. Today's film industry is powered by superhero blockbusters.

Things change. Bad habits linger. Even when a business model works, it doesn't always stick. Take The Blair Witch Project. The first film made $248.6 million on a $60,000 budget. The sequel, Book of Shadows: Blair Witch 2, which Artisan rushed into production for the following Halloween, cost $15 million and made back $47.7 million.

Original Blair Witch directors Daniel Myrick and Eduardo Sánchez, both of whom agreed to help produce the sequel, still seem dizzied.

“That was our crash course in Hollywood mentality,” Myrick says. “Even though a studio might buy your movie, it doesn't mean they understand your movie.” Sánchez and Myrick had invested all of their money and energy making the first film — they'd had to make it work. But for the sequel, everyone wanted cash up front. And because the first film had been such a hit, those paychecks weren't small.

“It suffered, I think, from the success of the first film,” Myrick says. “It felt justifiable that producers were charging huge fees.”

“Obviously, it was the ultimate ego trip,” Sánchez adds. “We never imagined we could make a film that would require a sequel.” He liked the new team's ideas but in hindsight realizes that “they rushed it.”

“I think people are doing horror for the wrong reasons, mostly financial reasons,” adds Blum. “When they get a hit they're like, 'We're going to hire all new people! Keep the pot for ourselves!’ And usually the sequel sucks as a result.”

Blum refuses to talk sequel strategy until the original film is a hit, “almost like the original movies are pilots.” For Sinister 2, The Purge: Anarchy and Insidious Chapters 2 and 3, Blum doubled the budgets to a whopping (for him) $9 million or $10 million. “I am willing to give up a lot more of the pie to get the original director and writer back for the sequel.”

Marketing costs may be Hollywood's most irrational rule. A $30 million P&A budget is an impossible tax on midpriced movies, which rarely recoup more than $100 million. In the age of the DVR, it's counterintuitive that two-thirds of advertising budgets are spent on TV commercials. Yet executives are forced to play chicken: The first one to cut TV spots will be fired if the film flops.

“The stakes are too big and you don't have enough opportunities to try,” Stanford economics professor Liran Einav says. “It makes the movie business more conservative than other businesses.”

Blum says he intends to do to distribution what he did to movies: “Take the costs down.”

“On the movies, I took it down 80 percent, 90 percent,” he says. “Distribution, take it down 65 percent.”

Blum's horror hits have proven him right. Now he wants to learn if his model will work for a creative risk: the teen girl musical Jem and the Holograms. It's not scary. Neither was Whiplash, which earned him a Best Picture Oscar nod (if not much money).

But his character-driven thrillers are only intermittently scary anyway. Take away the jumps, as Blum mentally does to check that a script has a strong plot and characters, and “every movie that we do is a Sundance drama.” Sinister was about choosing career over family, Insidious about grief, Paranormal Activity about a boyfriend undermining his girlfriend's concerns, and The Purge a cautionary tale about societal repression. “The genre layer of the movies is a way to turn the system on its head and smuggle these dramas into 3,000 theaters.

“You can't make any movie on a low budget. Most movies you can't,” he continues. “But most movies could be done for a lot less!”

Doubt Blum at your own peril. He loves to tell the story of how, before his daughter was born, instead of paying $22,000 for two first-class tickets to Morocco, he purchased a row of coach seats for $1,800 and spent $500 on a custom-made, blow-up bed he brought on board in his carry-on. (Total savings: 89.5 percent.)

Yet while Blum keeps his film budgets in check, he's finally allowing himself one splurge: a new van. He hired a guy who specializes in mobile offices, mostly million-dollar, bullet-proof Escalades, which he ships to Africa and the Middle East.

“An Escalade is too fancy,” Blum says. “I like the down-and-dirty aspect.” Instead, he sweet-talked the designer into retrofitting a humble Ford Transit. “We did not go for the bulletproof version,” he clarifies. He grins. These days, he's feeling invincible.