Jason BlumMark DuplassBlumhouse Productions’ Jason Blum and filmmaker Mark Duplass aren’t the likeliest pair to join forces, but the microbudget horror maven and the indie veteran found common ground when they linked up just over a year ago on a found-footage pic Duplass was hammering out with director pal Patrick Brice. Creep follows the unfolding tale of a videographer (Brice) who answers a Craigslist ad to shoot video of a stranger (Duplass). The two filmed the pic on the fly shaping the story as they went. When Creep began looking like a horror pic, Duplass rang Blum, who then came aboard as producer. The film premiered last week at SXSW.

Blum, who made his fortune and his name on 2009′s game-changer Paranormal Activity, has seen his reputation as a hitmaker climb as audiences keep buying tickets for his insta-franchises including Insidious, Sinister, and The Purge. In a SXSW keynote speech, he lined out the secret to Blumhouse’s success: low budgets of $1M-$3M, directors with something to prove (and, often, bad studio experiences under their belts), no CG, no rebate-state shoots outside of L.A., and scale pay for cast and crew with a cut of the profits if the movie is a hit.

SXSW Duplass Blum CreepHowever Creep‘s future shakes out, Duplass is ready to embrace alternative channels of distribution. The actor-writer-director-producer got his start with his and brother Jay Duplass’ indie drama The Puffy Chair, one of Netflix’s early streaming success stories. He’s now produced and distributed nine more features using his own Blum-like formula developed over the past decade working in indie film. Creep is the first of their two features together, with Universal and Blumhouse’s Stephen King adaptation Mercy also on the way. Blum and Duplass explained their simpatico methods during SXSW:

DEADLINE: What first got you on each other’s radar?
MARK DUPLASS: I first met Jason in 2005 when he was making sensitive relationship movies and I was making sensitive relationship movies, and we went in for a sensitive relationship general meeting and liked each other and got along. Then I watched him go through his Paranormal transformation, and we said, “We should try to work together and get our brands together.” We both share a dorky excitement for breaking models in the industry and doing things new ways.
JASON BLUM: Mark’s work is incredibly authentic; it feels real, and I’m interested in that. Our movies are scary if they feel real. I had the same relationship to Creep as I did with Paranormal Activity – these guys went off and made the movie and showed me a rough cut, and I was compelled by it. The scariest movies feel relatable. And found-footage movies now, not true 5 or 6 years ago, are very tough to pull off because there have been so many of them. I’ve been pitched every found-footage movie ever, and 99 out of 100 of them I go back to them and say, “Don’t shoot it found footage.” The concept these guys came up with couldn’t be made any other way.

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DEADLINE: What did you feel you could do differently with found footage that hasn’t been done to death?
DUPLASS: I took a much more helicopter view of it, which was that there’s nothing essentially wrong with a form of filmmaking – nothing essentially cheesy or bad. Whether people have misused it or not, it’s not the form’s fault. It’s an easy way to make a movie and at low cost so everybody and their grandmother are going to try to make one. But just because there’s a sea of diarrhea doesn’t mean you shouldn’t try to make a good one. My goal was to focus on the performances and the relationship. I wasn’t aiming to make the scariest movie possible; the movie led us to that.

DEADLINE: What are the challenges in marketing a found-footage movie in 2014?
BLUM: YouTube is found footage. It’s here to stay, and people will always come up with new concepts that will make sense for found footage. But it’s harder to market than it was. On the feature side there’s a fatigue, but it’s going to continue to happen because people are going to continue to have ideas that can only be shot as found footage.

DEADLINE: How has the Blumhouse model of filmmaking and distribution changed over the past few years?
BLUM: The model we established was to give creative people complete creative freedom in exchange for betting on themselves, so they work for the minimums you’re allowed to work for, and if the movies work in a big way, everyone does very well. If the movies don’t, nobody loses too much money. The benefit to doing all the movies low budget is we can tell different types of stories and take creative risks. The Purge would have been irresponsible to do for $20M, but to do it for $3M makes sense.
DUPLASS: We constantly get asked questions by the people around us, our agents and our co-workers like: “What the f*ck are you doing making these little movies? You could get paid so much to go direct multimillion-dollar movies; why are you farting around in the woods with your friend and a handheld camera?” I think that’s how you’re able to stay relevant. A lot of my favorite filmmakers had 8-9 year runs, and then they started making garbage. I’m so terrified of that.
BLUM: It’s totally different forces driving us, but I love that we reached the same conclusion. For me it’s much more like a little kid rebelling. The minute I was told what to do at any age, I did the opposite. Hopefully I’ll do that for the rest of my life. I come from the business side and Mark comes from the creative side, but every time a decision came up about Creep it was two emails, and we agreed. I’ve not had that ever with someone on the creative or the business side.

DEADLINE: Do you see your model being replicated in the future by other companies?
BLUM: Currently there’s no other way to get a movie into 3,000 theaters except with a studio. We have a first-look deal with Universal, and it’s been fun to work with them. But studios are a part of our life. I think they’ll always be, but they’ll play a different role. The consumer and the creator are getting closer together.
DUPLASS: We are less than 10 years out from that. I agree – as a guy who makes independent films and sells them to multiple kinds of distributors as opposed to having a first-look deal, it’s being aware of the ecosystem in which I’m involved and not trying to murder these studios on the purchase price. I need them to be in business next year buying my next movie. Rather than saying, “You need to give me X amount of dollars multiplied by 25 for the movie,” I’ll say, “Give me X times 5, but I want 20 percent when it goes really big.” That way if we don’t work out so well they’re not going to hate me for it, and if we do work out we all win.
BLUM: It’s a long road, and you want to win together. When you lose, you want to lose as little as possible together. That’s a very difficult concept for people to understand.
DUPLASS: Embrace that and allow it to become part of your model. Jason has done that on a larger scale; I’ve done it on a smaller scale. The horror movies he makes can make quite a bit more than the smaller relationship movies I make but we’re still dealing in relatively similar profit margins. You still have to be willing to do what we do, which is scrap around a little bit. I still carry lights on my set. I love doing that. Most people in Jason’s position, after they make a $3M horror movie, all they want to do is make a $20M movie. But I like being in the space.

DEADLINE: How do you see collapsing release windows factoring into the near future?
BLUM: There’s S-VOD, which is 3 1/2 months after the theatrical release. The windows are going to get closer and closer, and the sooner they collapse in my mind the better it’ll be for everybody. It’s coming, but change is hard. It will be more profitable for everybody, including exhibitors.
DUPLASS: When I sold my first movie The Puffy Chair to Netflix and Roadside Attractions, Netflix had just started their streaming service. I had a very small theatrical run, the movie made $250K and got good reviews. Then it went on Netflix’s streaming site, and within the first year a million people saw it streaming, and it made my career. They saw it on little tiny screens, but I’m making movies about faces and feelings. There’s a new group of filmmakers that are less snobby about having their movies seen in a theater. If you’re making a moody tone poem a la Terrence Malick that’s shot on 70mm, by all means get your movie in theater.
BLUM: Or The Avengers.

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DEADLINE: Jason, what’s your process for deciding if a Blumhouse movie’s going to get a theatrical run or just go digital and home video?
BLUM: We test screen the movie, watch it with an audience, and at that point we decide three things: wide release, non-wide release, or we’re going to augment and try to get a wide release. If it’s 1 or 2, we know it’s going to be like The Purge or it’s going to be a limited movie like Barry Levinson’s The Bay, but the third option is like Mercy. There’s enough there that it might be worth spending another $500K – that’s what we did on Insidious. We spent another $500K, we shot three extra days. When we sold the movie we had no wide release commitment from Sony. We screened it for an audience and said, if we do these three more days maybe we’ll get there. That pushed it over the edge. But that takes longer. Paranormal Activity took three years and we did 50 reshoots on that movie. Now, “reshoot” meant Oren [Peli] getting his camera and shooting Katie [Featherston] in his house and cost 25 cents. But there’s a category of films that we do that are on the edge. Barry Levinson’s movie screened and we thought there were things we could do to it, but Barry really didn’t want to do a lot of those things. I stand by my word, and ultimately it was his choice. I said, “If you don’t want to do these things, it’s going to be a more limited release.” And he said fine.
DUPLASS: You cannot ask for anything more than someone who has a good brand and a good reputation who can make your movie go big and puts final cut in your hands. That’s why you want to make these movies for scale.
BLUM: And as soon as you pay people from that model, word travels fast and agents are more willing to put clients in movies.
DUPLASS: Now I can go back when they say, “You’re going to work for $100 a day?” — “Well, this was the backend from the last movie.” They’re like, “I’ll do it!”