How 'Paranormal Activity' Hit It Big

The Low-Budget Horror Film May Become One of Year's Most Profitable

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NEW YORK ( -- A month ago, few people outside of Paramount and select cities knew about "Paranormal Activity." But this week, the ultra-low-budget horror movie is on track to becoming one of the year's most-profitable films. How? By letting consumers play distribution chief, and taking more than a few cues from the "Blair Witch Project" playbook.

'Paranormal Activity' has been rolling out to theaters where fans have demanded it.
'Paranormal Activity' has been rolling out to theaters where fans have demanded it.
The $15,000 horror movie, directed by San Diego filmmaker Oren Peli, first gained a cult following over a year ago after screening at the 2008 Slamdance Film Festival, eventually catching the attention of Steven Spielberg. The blockbuster director initially wanted to direct a big-budget remake of the film, using the original cut as a DVD extra, but instead brought the film to Paramount/DreamWorks, where it took on a new life of its own.

"When we started out, we were excited and happy to let this movie exist as a great cult movie. That could've potentially been the road we took," said Megan Colligan, Paramount's co-president of marketing. "When you're sitting down to market any movie, you have to look at the assets for the film. But in this case, the hugest asset is the film itself."

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After midnight screenings in Los Angeles and select college towns elicited unprecedented amounts of demand at the studio and at local theaters, Ms. Colligan and her co-president of marketing, Josh Greenstein, teamed up with Eventful, a user-generated entertainment booking site of sorts, for a campaign that goes far outside the traditional route.

Fans across the country could demand -- literally, it turns out, by hitting a "Demand" button on its website -- that the movie screen in their area. That, in turn, determined which markets Paramount would select for a series of midnight screenings -- all achieved by using a bare minimum of select TV spots featuring reaction shots from Hollywood screenings and a smattering of online and radio ads.

An experience
Mr. Greenstein said the focus throughout has been to sell "Paranormal Activity" as an experience rather than just a movie. "Traditionally, when you cut TV spots or a trailer, you show the scariest parts of the movie, you build suspense, and then you actually have visuals from the movie to support it," he said. "But because the movie works so well as a truly slow build into terror, we didn't want to show your usual kind of scenes and cutting-style horror movies have been using. We wanted to use an experiential sell to help dictate how and where it rolled out to the consumer."

The strategy seems to be paying off impressively so far. The film grossed more than $500,000 the weekend of Oct. 2, after being shown exclusively at midnight in 12 markets, including five sold-out screenings at Los Angeles' ArcLight theater, prompting Paramount to expand "Paranormal" to a regular showtime schedule in 46 markets in 170 theaters last weekend.

All the online buzz and viral marketing surrounding "Paranormal Activity" resembles the path first paved by "Blair Witch" 10 years ago, but with one notable difference -- credibility. At no point has Paramount pretended that the camcorder footage in "Paranormal" is anything but fiction, a conceit that became the focus of Artisan Entertainment's viral push to make "Blair Witch" seem like a real, mythical phenomenon. The company even went so far as to create websites perpetuating the myth of the fictional "Blair Witch," while Paramount seems to be skewing more toward audiences' reaction to the movie itself rather than tacking a deceptive "based on true events" tagline onto the marketing materials.

"Audiences are so sophisticated now, pretending this movie is something it's not would feel false to people," Mr. Greenstein said. "We really want to sell it for what it is. The truth is, the experience of watching the movie is terrifying, and it's an absolute communal type of experience best seen in the movie theater."

By the end of the weekend, Paramount was expected to have exceeded another goal, having announced on Oct. 5 that the film would receive a wide release once it hits 1 million demands on its Eventful page. The "Demand" ticker had surpassed 860,000 by mid-afternoon Friday, nearly triple the amount of demands logged 72 hours prior, with "Paranormal Activity" becoming a recurring trending topic on Twitter during the midnight hour for several consecutive weeknights. A sponsored Twitter account, @TweetYourScream, already has over 4,700 followers, and a Facebook page currently reaches more than 47,000 fans who've been uploading their video reactions to the film.

Quantifying buzz
"Using social media as a marketing vehicle as well as a market-research vehicle is a major advantage," said Sarah Hofstetter, senior VP-emerging media and client strategy for 360i, an independent digital-communications agency that has worked with Paramount on previous campaigns but not on "Paranormal." "Not only do they know who's interested in it from a geographic perspective, they can quantify the demand from a buzz perspective."

But if and when the movie hits a wide release, Ms. Colligan said the same rules of demand will apply, rather than determining a fixed screen-count. "Everybody who demanded it will have that movie play within a radius of their home town," she said. "If it were to take off, in some ways it could develop a life of its own on some level."

Eventful has also had to set new benchmarks, having initially anticipated a maximum of 100,000 participants. "We blew past that in days," CEO Jordan Glazier said. Previously, the site had been used primarily by the concert industry to gauge touring schedules, most notably for Kiss and Dane Cook, who each booked multiple dates on their recent tours based on demands in excess of 500,000. "Paranormal Activity" has become Eventful's most-demanded movie to date, and could be used as a benchmark for other indie films' theatrical distribution strategies.

"For the music industry, it's essential because they're making financial decisions about where to send the convoy. For the studios, they're making a financial decision about how many tickets they'll sell in a given market," Mr. Glazier said. "To advertisers who tap into that vein of helping people achieve their goals, it's the ultimate win."

Four lessons from 'Paranormal Activity'

  • Let consumers dictate distribution. Once "Paranormal Activity" reaches 1 million Demands on its Eventful page, Paramount will release the movie within a reasonable radius of all the fans who demanded the movie by providing their age and zip code. "It totally transforms the brand into a benefactor," Eventful CEO Jordan Glazier said of the site's marketing model. "You now have a self-identified list of participants who are passionate about entertainment, and the event brand has even more value to them."

  • Don't waste money on large-scale TV campaigns when you can talk directly to your fans. "[Paramount is] using social media as a marketing vehicle as well as a market-research vehicle," said Sarah Hofstetter, a senior VP at 360i, an independent digital-communications agency that has worked with Paramount on previous campaigns.

  • Don't create false hype. Ten years ago, "The Blair Witch Project" struck gold with one of the most successful viral movie marketing strategies to date by trying to pass itself as a documentary rather than a fictional horror movie. "Paranormal Activity's" theatrical trailer and TV spots are focused more on marketing the audience's terrified reactions to the movie itself.

  • When there are low financial barriers, have fun. "Paranormal Activity" cost a mere $15,000 to produce, with little spent thus far on traditional media, so Paramount stands to recoup any overhead costs thousands of times over if the film catches on with a national audience. But despite the initial success, "If it all ended today we'd be very happy," said Paul Greenstein, the studio's co-president, marketing.
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