'Paranormal Activity' Is Now the Most Profitable Movie of All Time   

October 30, 2009 First it was John Carpenter's "Halloween." Then 1999's mockumentary "The Blair Witch Project." Now, the most profitable film in history is "Paranormal Activity."

So says the Christian Science Monitor and every other major media outlet:

“Paranormal Activity” the ultra-low-budget, documentary-style horror flick that surprised box-office watchers by coming in No. 1 this past weekend, were a stock, it would be a Google share times 675.

First-time director Oren Peli spent just $15,000 making the film, which has so far grossed more than $65 million in the US and Canada. That’s a record-breaking rate of return of more than 433,000 percent.

The Wrap’s Daniel Frankel crunches the numbers, noting that the the previous record holder, “The Blair Witch Project,” cost $60,000 to produce and garnered a 414,000 percent return on investment. By comparison, “ET: The Extra-Terrestrial” returned a measly 7,541 percent return.

So how did Paramount, which distributed the film, manage to get such an astounding bang for their buck?

Step 1: Use the Interblags

The movie’s Facebook page has over 125,000 fans. Not too shabby, but it pales in comparison to the more than one million fans flocking to “Transformers: Revenge of the Fallen.” “Paranormal Activity,” also has more than 8,000 followers on Twitter. Again, this is impressive, but Fake Michael Bay still has more.

The real genius was in the way the film’s distributors let the fans decide in what cities the movie would be shown. As the New York Times reported last month, Paramount, after initially releasing the film in 13 college towns, then set up a page on Eventful, that invited moviegoers to “Demand it!” in their town. As more and more “demands” rolled in, the studio gradually widened the release.

Students of social psychology will recognize this approach as not just a good way to gauge viewer interest, but also as a way to influence it. People have a general desire to be consistent in their behavior, and by having someone make the small, initial commitment of clicking on a button makes that person more likely to follow through and go see the film.

Step 2: Don’t spend too much

The key to having an astronomical return on investment is to start off with a tiny principal. Director Peli shot the movie using unknown actors in his own home, which he renovated for the occasion. The whole thing cost $15,000, and he got some hardwood floors and a new stairwell out of it.

By comparison, if, say “Saw VI,” which cost $11 million to produce, were to make a comparable return on investment, it would have to gross almost $50 billion, which is about 25 times what “Titanic,” the highest-grossing film ever, brought in.

Step 3: Don’t factor in the marketing budget

Even though the film cost only $15,000, Paramount spent about $10 million attempting to let people know about the film. That’s not a lot by Hollywood studio standards, but if you factor it into calculating your return on investment, it sort of ruins the whole thing.


Talk about this story on ESplatter's Message Board

Gotta scoop? Drop a line to



<< Back



Related News
'Paranormal Activity' Edges Up on 'Zombieland'
'Paranormal Activity' Stays Number 1 - Beats 'Saw VI'
Demand 'Paranormal Activity' in Your Neighborhood
Horror Franchise War: 'Saw VI' Director Pulled Off of 'Paranormal Activity 2'
'Paranormal Activity' Opens Wide October 16
'Saw VI' Director to Helm 'Paranormal Activity 2'
'Paranormal Activity' Gets Distributor, Remake
Brian De Palma May Direct 'Paranormal Activity 2'
'Paranormal Activity' Follow Up Is Already In the Can
'Paranormal Activity 3' Set for Halloween 2011
'Paranormal Activity' Is Now the Most Profitable Movie of All Time
'Paranormal Activity' to Hit Screens in Two Weeks
Good Word of Mouth Propels 'Paranormal Activity' to Number 1
'Paranormal' Success Inspires 'Blair Witch' Sequel
'Paranormal Activity' on DVD in One Month
Excellent 'Paranormal Activity' Trailer Debuts
Daily Horror Briefing
Vote for Your Favorite Films of 2009 -- Win a 'Paranormal Activity' Prize Pack!
'Paranormal Activity' Expands
2007 Screamfest Horror Film Festival Winners Announced

Latest News
Ti West's 'The Innkeepers' to Debut in 10 Days!
Highest Body Count Movie Ever to Be Released January 3
Christopher Lee Featured in Latest Mystery Science Theater DVD Set
Screenshots for 'Call of Cthulhu' Videogame
Argento 3D 'Dracula' Trailer -- Underwhelming Or Good?