Should Hollywood Be Afraid of Horror Movies?

Credit: Universal

Audiences love to be scared.

From Friday the 13th to Halloween, studios have profited from trading on moviegoers' fears and bringing their biggest nightmares to life on the big screen. Yet after a solid 2013 for the horror genre, it's the major studios that have been getting a fright in 2014, and relief doesn't appear to be on the way.

Missing the 'Mark'

After the success of horror movies in 2013, the industry had high hopes for a repeat. Those hopes shattered right in the first weekend of the year when Paramount's (a subsidiary of Viacom (NASDAQ: VIA  ) ) Paranormal Activity spin-off The Marked Ones under-performed.

Designed to capture the same thrills but catered directly to the growing Hispanic demographic, Marked Ones earned $18 million in its opening weekend -- $11 million less than the most recent Paranormal Activity movie, made in 2012. It was also the lowest opening in the franchise's history, outside of the original, which had a gradual expansion.

It hasn't improved much -- 2014 has yet to see a horror film top the box office. At this point in 2013, seven horror films had made their way to the top.

Purged

Many had thought this weekend's The Purge: Anarchy from Universal (a subsidiary of Comcast  (NASDAQ: CMCSA  ) ) would help reverse the trend. But while it started off strong, it ended the weekend in second place and with about $8 million less than its predecessor did in 2013.

To be fair, few expected Anarchy to outpace the original Purge -- that film had a well-known lead in Ethan Hawke while this one relied on a collection of lesser-known rising stars. Still, the results disappointed.

So how did Hollywood get onto such an expanded horror kick in the first place? All roads eventually lead back to 1999's The Blair Witch Project. Made for just $600,000, the movie became a phenomenon and launched what is now referred to as the "found footage" era, which helped reboot moviegoers' interest in the genre overall.

But with the exception of Paramount and its Paranormal Activity franchise, few got it right. Even Witch's critically panned sequel Book of Shadows stumbled in its opening weekend, earning just $13 million -- especially underwhelming because it was made for $15 million. Yes, it topped out at $47 million worldwide, but that's nothing compared to the original's $248 million total haul.

Underperforming vs. flopping

But importantly, there's a huge difference between underperforming and flopping. Take an expanded look at the films I mentioned earlier that have underperformed in 2014 -- you'll notice the majority ended up turning a profit, just not as big as executives expected when they ordered the movie into production.

Yes, The Marked Ones made less than the franchise's other installments, but it was also made for only $5 million, meaning Paramount had seen a healthy return on its investment already. Devil's Due and Oculus were also made on the cheap, so it didn't take long to recoup production costs. The same can be said for this weekend's The Purge: Anarchy, which may have carried a higher price tag than the original but still was a micro-budgeted release.

In the majority of these cases, these films are low-risk, high-reward ventures -- the rewards just haven't been as sizable as in years past. For the studios that produce and distribute them, they are still financially viable. But that might not always be the case.

As filmmakers have gotten more creative, the level of audience expectations has risen and the major studios haven't always been able to keep up. As a result, they tend to rely on going to the same well one (or several) too many times. Eventually moviegoers domestically and internationally begin to get tired of paying over and over for a movie they've essentially already seen, only the earlier versions did it better.

As follow-ups continue to underperform their predecessors, studios will be the ones fearing what they see on the big screen ... and in the box office results.

Cable's own fears

The alternative of going to the movies has always been watching something at home, but the cable industry is feeling the crunch. With so many viewing alternatives, cable as we know it is going away. As a result, there's $2.2 trillion out there to be had and while currently cable grabs a big piece of it, that won't last. Do you know how to take advantage when that bubble bursts? When that happens three companies are poised to benefit. Click here for their names. Hint: They're not the ones you think they are.

 


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