The success of M3GAN and Smile has reminded those in the film industry that low-budget horror movies can be box office juggernauts. But their success has caused industry analysts to overlook the revival of horror films with micro-budgets, such as Winnie-the-Pooh: Blood and Honey, Skinamarink, and Kane Parsons’ The Backrooms.
Not only do these movies tell unique stories, but these micro-budgeted projects are harbingers of how film production will be changed by the maturation of new technologies and the public domain becoming filled with newly freed intellectual properties. Moreover, the creation and success of these projects also hint at how newly released technologies (such as shockingly cheap equipment, incredible software and, potentially, artificial intelligence) will impact the future of film production in and outside of horror.
The horror genre is as tried and true as any in film history and has indeed truly come into its own quality-wise over the past few years and this has manifested in greater success at the box office and greater critical acceptance (which historically has been mixed at best). In this new era of horror, big budget (M3GAN, The Menu) as well as micro budget (Skinamarink, Terrifier 2) films are finding favor with audiences particularly on the big screen where the darkened and communal environment of the movie theater creates the perfect showcase for the thrills and chills of the genre. The beauty of horror is that the scary nature of them also translates to the home viewing environment as well so the revenue stream continues for this very cost-effective genre.
Paul Dergarabedian | Comscore | Sr. Media Analyst
A Short History of Small Budgets
The difference between low budget films and micro budget films is not a clearly defined term, but a budget of less than a million dividing the two categories is the definition my contacts brought up.
With that said, micro budget projects are not new. 1968’s Night of the Living Dead was made with a budget of $125,000 and went on to earn $30 million. Additionally, Bruce Lee’s 1972 The Way of the Dragon earned $130 million on a production budget of just $130,000. So while micro-budget films have always existed, these projects becoming box office hits faded away as the blockbuster movie became the dominant trend.
Additionally, micro budget films exist in all genres, but the horror genre is an ecosystem that micro budgets tend to thrive in. This is something that Josh Miller pointed out to me. While Miller is known as the co-writer of Violent Night and the Sonic the Hedgehog films, he has been hosting a horror screening series in LA called Friday Night Frights for the past 12 years. Moreover, Miller’s 2003 film, Hey, Stop Stabbing Me, only had a budget around $500.
“I think at their core the appeal of horror films are their ideas. That is something horror has over most other genres, which are inherently more reliant on execution,” Miller said. “Because horror fans, whether they would articulate it this way or not, are after the ideas — that makes them a bit more forgiving of everything else. We can accept (even embrace) these films being rough around the edges, even amateurish.”
Additionally, a significant reason for this according to Miller, is that the horror genre gives creators permission to maximize the most of a small budget by being weird and experimental.
“So much money is spent making even the lowest budget studio movies. That has and always will mean that studios are more inclined to stay on the beaten path. Because horror movies can get away with small (even micro) productions, that lessens the risk of trying something new – it even encourages it,” Miller shared. “If you can’t compete with the A-list cast and special FX of a studio horror movie, you can do what they can’t — be radically different and weird.”
For people of my generation, our history with micro budget films started with The Blair Witch Project. With a budget less than a million dollars, this indie horror film with only three actors and two co-directors/writers made nearly $250 million. This 1999 film inspired a fleet of found-footage movies to be produced. But while these films had “small” budgets for Hollywood standards, it wasn’t until Paranormal Activity was released in 2007 that another micro-budget film became a huge hit.
Paranormal Activity was made with a production budget of $15k and post-production budget of $215,000. This movie went on to earn under $200 million. Like The Blair Witch Project, it inspired a series of sequels. Unfortunately, and just like the first Blair Witch, future installments in the Paranormal Activity franchise were made with higher budgets and – in my opinion – lacked a unique style as they began to look more and more like a standard Hollywood production.
While small budget projects are commonplace for film students and amateur filmmakers trying to make a name for themselves, we are now seeing a resurgence in micro-budget films being treated like mainstream movies when we consider the media attention and financial success they generate.
But first, why are budgets so big?
Understanding the Blockbuster Strategy
There are numerous examples of movies or shows that were supposed to be the next big thing, but that fizzled out. These failures cause people – both inside and outside of the entertainment industry – to wonder why studios spend so much money on unproven ideas. The reason for this is what Professor Anita Elberse describes as the “Blockbuster Strategy.”
In an interview with Forbes, Elberse defined the blockbuster strategy “as one in which a content producer makes huge investments to acquire, develop, and market concepts with strong hit potential, and then banks on the sales of those titles to make up for the middling performance of their other content.” Moreover, it is an approach found in “leading film studios, television networks, book publishers, music labels, video game publishers, and producers in other sectors of the entertainment industry live by this approach.”
In short, this is a go big or go home approach to investing in content. This approach of a studio putting all of their eggs in one basket may seem reckless, but it works. As Elberse thoroughly documents in her 2013 book, Blockbusters: Hit-Making, Risk-Taking, and the Big Business of Entertainment, “the idea of smaller bets being ‘safer’ is a myth [because]…blockbuster strategies reliably beat the alternative of more risk-averse strategies.”
Even streaming platforms, which could have been home to moderately budgeted projects, fully embraced the blockbuster strategy throughout the 2010s and early 2020s. (That’s right, we will soon hit the mid-2020s. Feel old?) For instance, two of Netflix’s breakout original shows were House of Cards and Orange is the New Black. The budget for OITNB was $4m an episode while House of Cards was $5m. These budgets have only skyrocketed with The Crown costing $13m an episode and season four of Stranger Things was $30m an episode. And it is clear that Netflix’s largest competitors, Disney+ and Amazon Prime, are also following the blockbuster strategy. The first live-action Marvel shows on Disney+, WandaVision, Hawkeye, and Falcon and the Winter Soldier, all cost $25 million an episode. On top of this Amazon reportedly spent $1 billion buying the rights for and making The Rings of Power.
Reasonable Budgets Return, But Why?
The last decade provided incredible opportunities for talent, but the money printer is slowing down and Hollywood’s biggest companies have announced or are expected to announce cuts to production budgets. Disney+ lost 2.1 million subscribers during its last quarter and Disney+ isn’t even expected to be profitable until 2024. A result is that Disney is expected to cut billions from content production budgets. And even Netflix is expected to drastically cut the amount it spends on producing and acquiring content.
Wallets are tightening for a few reasons. The main reason is that the Federal Reserve decided to rein in inflation by raising interest rates. So companies that relied on low-interest rates for revolving credit and or for loans to invest in risky projects no longer have access to cheap money. This economic change has also forced companies with streaming platforms to realize that they couldn’t continue to burn money just to grow subscriber numbers. Instead, these platforms have to actually generate net revenues.
Outside of interest rates, we are in a time of massive economic and political uncertainty. Concerns over China’s economy and its relationship with the United States have already impacted Hollywood productions. There is also Russia’s invasion of Ukraine and the fear that it might deploy nuclear weapons. There is also Covid lingering and a dozen of other issues blanketing us with dread.
But it is in dark and stormy times of uncertainty, that horror and experimental art thrive.
From the Darkness, Micro-Budget Horror Rises
Horror movies have an incredible history of offering fantastic returns on investments (ROI), so there are always horror films being developed. However, it is during times of stress that the genre is revitalized by audiences and creators. As director David Bruckner told M.M. Owen, Ph.D. in Our Age of Horror, “In anxious times,” Bruckner shared, “people are more likely to turn to horror. If you have an uneasy night at the movie theatre, you are sort of answering the call of your times.”
Periods with cultural and financial anxiety are also periods that attract risky filmmakers with love for horror. As Seth M. Sherwood – a writer – pointed out to me, “filmmakers with no money and a love of the macabre will always be drawn to horror because it’s the one genre where the core concept is adjacent to the unseen. We’re wired to be afraid of the dark. What we can’t see scares us most.”
Furthermore, “it’s pretty cheap to shoot a movie about something terrifying if you don’t have to fully see it for 2/3rds of the movie,” Sherwood added.
Also, these types of films have a loyal following. When discussing micro-budget horror films, producer and writer Joel Eisenberg shared why he enjoys these projects, “I love them due to a general passion that overcomes the budgets.”
With anxieties over how technology is impacting children and mental health, it makes sense that movies such as Terrifier, Terrifier 2, M3GAN, and Smile have found significant success. However, these extremely profitable and low-budget movies will lack the transformative impact that films such as The Blair Witch Project and Paranormal Activity had. This is because Skinamarink and Kane Parsons’ The Backrooms both benefit two distinct technologies. One, is YouTube. Long seen as a platform for videos that can easily be dismissed, it is now a breeding ground for talent. Whether it is a music video for an indie musician, a news show for a pundit with great hair, video essays; the platform is now home to audio/visual storytellers that Hollywood gatekeepers are willing to legitimize.
Warning, if you feel you’ve accomplished little in your life, I’m about to make you feel worse. That’s because the YouTube series, The Backrooms (Found Footage), was first created by Kane Parsons at the age of 16. His series became incredibly popular and A24, Atomic Monster, Chernin Entertainment and 21 Laps will help him adapt this series into a movie. This deal occurred while Parsons is currently just 17-years-old (…and oh dear god I’ve done nothing with my life). Now, Parsons has yet to reveal the budget he had for this project, but given that he’s still in high school, it is safe to assume that he didn’t have a huge budget.
The Backrooms (Found Footage) is inspired by the internet birthed urban legend also called backrooms. This digital folklore centers on people noclipping out of our reality to a world comprised of never-ending office rooms and hallways; leaving a person potentially trapped forever in liminal spaces inspired by corporate offices.
Also inspired by the found footage genre, Parsons’ first Backrooms’ video was released January 7, 2022 and has since gone on to be viewed more than 45 million times. In addition to this video and its later installments being incredibly well produced, they benefit from two technologies: YouTube and Blender.
First released in 1994, Blender became freeware in 1998 and then became open-source technology in 2002. Since its release, Blender has been used for a variety of mainstream projects. From 2004’s Spider-Man 2 to Amazon Prime’s The Man in the High Castle to Ubisoft Animation Studio switching to Blender for its inhouse software in 2020, Blender has become a versatile tool that industry leaders could use. But as open-source tech, Blender has built a community of users who also created and shared tutorials and how-to-guides; documents that would make it easier for a high schooler in the 2020s to create high-quality content.
(If you want to learn more about Blender, check out this historical overview and you can watch this tutorial if you want to begin using the software.)
In addition to Parsons benefiting from Blender’s tech and community, he also benefited from “YouTuber” no longer being seen as negative but as a regular part of a creator’s/entertainer’s career foundation.
Similar to Parsons, Kyle Edward Ball has built his career on YouTube. For over five years Ball has been creating horror shorts on YouTube inspired by various nightmares. The majority of these shorts are less than 10 minutes. Then, he released Heck in July 2020. Ball explained to Inverse that it was based on a common nightmare that people shared with him, this being that they are children and a monster is present all while their parents are missing or dead. For Ball this short was a successful proof-of-concept he needed to create a longer film that would become the 100-minute long Skinamarink.
Created on a budget of only $15,000, Skinamarink benefited from Ball doing what all professional creatives should do – making the absolute most of the resources they have. As Variety’s William Earl wrote, Ball “used the shoestring budget to their advantage, utilizing creative shots and staging to imply movement and terror just offscreen, out of sight. The result is a feature consisting of unconventional viewpoints and angles influenced by the limitations of seeing the world from the eyes of the two central children, and the unknown malevolence spying on them.”
Ball wanted Skinamarink to gain traction the way most films do – by showing it at festivals such at Montreal’s Fantasia Film Festival and getting a distribution deal. However, a tech mishap at the festival allowed people to download the full Skinamarink film. The film quickly became a viral hit and was frequently discussed on a variety of posts on YouTube, TikTok, and other social media platforms. Similar to how the test footage of Ryan Reynolds as Deadpool leaking helped get Deadpool made, social media technology helped Skinamarink get a notoriety that no marketing campaign could replicate.
Skinamarink also benefited from the trend that Winnie-the-Pooh: Blood and Honey also benefited from – the public domain is now being flooded with intellectual properties that have been locked behind copyright for decades. In regards to Skinamarink, the film uses clips from cartoons that are in the public domain. Some of these are Max Fleischer’s 1936 Somewhere in Dreamland and The Cobweb Hotel, Balloon Land (1935), and Prest-O Change-O (1939). Even if one doesn’t recognize these animations by name, their images and sounds have continued to appear in mass entertainment for nearly a century. Deploying clips of these cartoon shorts in the unsettling narrative Skinamarink creates a uniquely uncanny experience for audience members, an experience that could only be accomplished because these shorts are so ingrained into childhood entertainment.
And on the subject of childhood entertainment, let’s get weird with Winnie-the-Pooh: Blood and Honey. The Winnie-the-Pooh we all think of was first published by A. A. Milne and E. H. Shepard in 1926. In 2021, 95 years later, this first version of Winnie-the-Pooh entered public domain. Rhys Frake-Waterfield used this as an opportunity to create a one-of-a-kind movie. On a budget less than $100,000, Frake-Waterfield created Winnie-the-Pooh: Blood and Honey, a movie that reimagines Pooh and Piglet as murderous monsters upset that Christopher Robin left them. This movie has already earned $4 million at the global box office, with about $1.7 million coming from the U.S. alone.
And the attention generated by Winnie-the-Pooh: Blood and Honey should not be a surprise to anyone. As Miller explained, “taking a non-horror character and making it horror is an irresistible gimmick. Though it is also easily played out. Blood and Honey or The Mean One make an impact when the trailers drop because no one had done it yet.”
“We saw the same thing in the literary world when Pride & Prejudice & Zombies hit. That launched an entire subgenre of imitators, which eventually played itself out,” Miller continued. “Now that the door has been opened, we’ll continue to see cycles like that with famous public domain characters being horrorized. What will be interesting to see is if any of these spawn a legit on-going subgenre, the way evil Santa horror movies have become an evergreen holiday fixture.”
So make no mistake, Winnie-the-Pooh: Blood and Honey will not be a one-off experiment. Walt Disney’s Steamboat Willie enters public domain January 1, 2024. As the film that introduced Mickey and Minnie Mouse to the world, make no mistake, there are filmmakers starving for a chance to tell twisted versions of Steamboat Willie. Disney’s intellectual properties aren’t the only ones that will soon be up for grabs.
Largely absent from the discussions over what James Gunn will do with DC movies is that many DC characters will enter public domain in the 2030s. Action Comics #1 is the first appearance of Superman and it will enter public domain in 2034 (some sources state 2033). Following this, Batman enters public domain in 2035 and Wonder Woman in 2037. Gunn addressed this issue in a DC Studios presentation, but it doesn’t change the fact that he, DC, and Warner Bros. are working under a countdown clock. Gunn’s Superman movie, Superman: Legacy, is currently scheduled for release in 2025. This leaves WB less than a decade to tell a story with the Man of Steel before the world is filled with versions building on public domain Action Comics #1 Superman.
And this is not a hypothetical. The director of Winnie-the-Pooh: Blood and Honey has already said that he wants to make an evil Superman movie once the character enters public domain. On top of that, A.I. tech is only going to get better.
Thanks to A.I., Micro-Budgets are the Future of Horror and All Films
As I stated earlier, Winnie-the-Pooh: Blood and Honey, Skinamarink, and Kane Parsons’ The Backrooms are more than just random micro-budget projects. Their successes stand on the shoulders of free/affordable technologies as well as culturally important intellectual properties being in the public domain. And one of these technologies will soon be content-generating artificial intelligence.
ChatGPT was released in November 2022. Though limited to being a text-based chatbot, by December 2022 it was being used to generate coding to make a functional video game. Image/video based artificial intelligence software are already generating visuals that are competing against human crafted content. With AI script writing software (such as Dramatron) and AI voice-generating/altering software entering widespread use, the 2030s will be filled with people who can easily create a Superman movie that could make anyone believe that a man can fly.
This is not a theoretical threat. As reported by Deadline, the Writers Guild of America sees AI as enough of a threat that it is part of their current negotiations. As Peter White wrote for Deadline, “A few years ago, it would have seemed crazy that AI would be able to replicate the work of TV and film writers. However, the rise of ChatGPT and other services, has shown that it might be closer than ever.”
Even if WGA can negotiate safeguards against ChatGPT and other AI software this time, the AI-genie is out of the bottle. Meaning it is only a matter of time before we see larger and larger projects released that were in-part created by AI.
Winnie-the-Pooh: Blood and Honey, Skinamarink, and The Backrooms stood out to me not just because they are micro-budget projects fueled by passion. With it becoming cheaper and easier to make high-quality movies with globally recognizable IP, these projects are precursors of the cinematic dreams that will come to future theaters.
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 I am aware that some filmmakers feel that micro-budgets are anything under $50k, but this is not widely accepted.