Let's call it the "Paranormal Effect" initiative.

Clearly dazzled by the fact that it could gross more than $100 million on a movie that barely cost $15,000 to make, Paramount Pictures is set to launch a new production wing devoted to films budgeted at less than $100,000. As my colleague John Horn reported today:

"The as-yet-unnamed division's initial plan is to finance as many as 20 'micro-budget' movies annually starting in 2010... Funds for the movies -- about $1 million annually -- will be part of Paramount's existing production budget....Some of the movies may end up serving as 'calling cards' -- a showcase for a novice director's storytelling talent for a future project. A handful of films may contain enough good ideas to merit a bigger-budget remake. And another group may rise to the top of the heap, getting a theatrical release."

It's a fascinating, potentially game-changing concept, since it's a wonderful way for studios to replenish the pipeline with new ideas, but ideas that can be executed on a cheap budget. Even if most of the films never see the light of day, it could serve as a valuable way for Paramount to gain access to new talent, since presumably the studio would retain the right to make a movie with anyone participating in the program. It will also surely make Paramount a magnet for every good low-budget idea in town, encouraging young filmmakers looking for a break to send their scripts, demo reels and story outlines the studio's way.

But, of course, there are drawbacks. Studios are notoriously control-freak-style institutions. So will Paramount executives really be able to keep their mitts off these projects and refrain from trying to buff away all the rough edges? Can the studio execs refrain from giving the kind of soul-killing notes ("Can you make this character a little bit less unlikeable? Shouldn't we have a little more jeopardy in the second act?") that have been endlessly parodied by every writer who's ever spent more than a weekend doing a studio rewrite?

And since it's really, really tough to make a $100,000 movie while honoring commitments to SAG, the DGA and other unions, how will Paramount bankroll movies that presumably skirt union work rules and minimum compensation? (Paramount insiders contend that its union agreements contain provisions to accommodate the making of movies less than $2 million).

When I spoke to industryites around town this morning, they were both enthusiastic and skeptical. After all, other studio efforts to play in the low-budget world have largely failed, most recently with Fox Atomic. And for years, Paramount itself tried to make low-budget youth-oriented films through MTV Films, which had what was at the time the most valuable youth culture brand of all. But MTV never had the kind of autonomy that allowed it to pursue cutting edge ideas, the most notorious example being with "Twilight," which MTV had developed but which was killed by a top Paramount executive who didn't think teens would be interested in vampire movies.

In other words, it's a pretty huge leap for a studio to give young, unknown filmmakers a big heaping dose of creative freedom. That's not to say it can't be done, simply that it will require a dramatic turnaround in the usual kind of executive mindset that controls studio production decisions. After all, "Paranormal Activity" is still a fluke -- those kinds of movies don't materialize every day. Paramount will have to be willing to absorb a lot of failure and creative missteps along the way while it waits for that one shiny diamond in the rough.

So while I'm betting this new movie division could someday produce a dazzling $100,000 cinematic gem, the big question is whether the studio -- being an institution largely built around short-term thinking -- will have the patience to wait for that gem to show up.

Photo: Katie Featherston and Micha Sloat in "Paranormal Activity." Credit: Paramount