STEVE HENN, HOST:
There is one rule in Hollywood - bigger is better - and biggest is best.
STACEY VANEK SMITH, HOST:
The only example of this you need is a little movie franchise called "The Fast And The Furious."
(SOUNDBITE OF FILM, "THE FAST AND THE FURIOUS")
VIN DIESEL: (As Dominic Toretto) That railroad crossing out there is exactly a quarter-mile away from here. On green, I'm going for it.
SMITH: You know those car chase scenes they used to have, like, at the end of movies? "Fast And Furious" is basically just the car chase scene. That's the whole movie is the car chase scene.
(SOUNDBITE OF FILM, "THE FAST AND THE FURIOUS")
UNIDENTIFIED ACTOR #1: (As character #1) Cops are all over it. Man, we're good to roll. I repeat, good to roll.
UNIDENTIFIED ACTOR #2: (As character #2) All right.
UNIDENTIFIED ACTOR #1: (As character #1) Let's race.
HENN: They've made seven of these movies, and altogether, they've earned $3.9 billion - billion dollars - at the box office. And I got to say, I've always been curious what would it be like to direct one of these huge, big-budget films.
ROBERT COHEN: Lots of fun (laughter). From the point of view of a filmmaker, you have all the toys and you have enough time.
HENN: This is Rob Cohen. He directed very first "Fast And Furious" film. He created the series.
SMITH: After directing "The Fast And The Furious," Cohen was the toast of Hollywood.
COHEN: And everybody was so friendly and so nice and let's have lunch and read this script and come to this party and yeah.
SMITH: And he started getting all of these offers, and he got an offer to direct an even bigger budget movie. That's the way it works.
HENN: This one was a film called "Stealth." Its budget - $135 million. It was like "The Fast And The Furious" but with fighter jets and drones instead of cars. And at one point, one of the drones becomes self-aware.
(SOUNDBITE OF FILM, "STEALTH")
JOSH LUCAS: (As Lieutenant Ben Gannon) You put our squadron at risk.
JAMIE FOXX: (As Lieutenant Henry Purcel) Damn straight.
WENTWORTH MILLER: (As EDI) Tinman did what you did in Rangoon. You taught me.
HENN: This film was a total disaster. It lost close to $100 million by some estimates.
COHEN: Everybody was like I had leprosy. And the very same people that were so nice were suddenly, like, not - you know, I'd come into a restaurant and instead of them popping up and saying come on. Sit down. Join us. They were, like, pretending they didn't see me, and it was that extreme. Here, failure is considered a terminal disease that's communicable.
SMITH: For two years, Rob Cohen didn't work. Then he got a couple jobs, but nothing close to before.
HENN: And then someone completely unexpected, someone Cohen really didn't know very well, walked into his office with an offer. This guy was a movie producer, and he said, look, I have a different way you can make lots of money in the film business. Forget the blockbuster mentality. Just put that out of your mind. Think small.
SMITH: Hello, and welcome to PLANET MONEY. I'm Stacey Vanek Smith.
HENN: And I'm Steve Henn. Today on the show, what happens when one director leaves the world of big-budget Hollywood for something that could be even more lucrative - low-budget Hollywood.
(SOUNDBITE OF MUSIC)
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(SOUNDBITE OF MUSIC)
HENN: The low-budget movie producer who showed up in Cohen's office, Cohen told me he was kind of known around town as, like, a renegade trash merchant. But he also happened to be one of the most successful producers of all time - Jason Blum.
SMITH: Jason Blum - don't worry if you haven't heard of him. He hasn't won a lot of Oscars and students don't study him in film school.
HENN: Blum is famous in this industry for getting the most money out of the cheapest possible films. And when you rank movies by the return on investment - how much money went into making a film compared to how much profit it created - Jason Blum's name is on six of the top 20 films made in the last five years. Blum has developed a whole philosophy about how to make money in show business. And he figured it out when he saw an early cut of this little film called "Paranormal Activity."
(SOUNDBITE OF FILM, "PARANORMAL ACTIVITY")
MICAH SLOAT: (As Micah) All right, we're operational, babe.
UNIDENTIFIED ACTOR #3: (As character #3) Oh, sweet.
SMITH: "Paranormal Activity" is the story of a couple that is trying to record ghosts in their own home. Basically, the whole thing looks like a home movie.
(SOUNDBITE OF FILM, "PARANORMAL ACTIVITY")
KATIE FEATHERSTON: (As Katie) I just want you to know that as things get - things progress or get worse in anyway, I don't want to mess with the camera stuff anymore. I don't want to make it mad.
HENN: Blum saw the film and he decided to buy it, become the producer, find distribution. And he did this because it was scary, but mostly because it was cheap.
SMITH: "Paranormal Activity" cost less than a used Toyota Camry.
JASON BLUM: It initially cost $15,000.
HENN: Fifteen thousand dollars - how do you make a movie for $15,000?
BLUM: You have no crew, so you have one person and one person does everything. Oren, in his case, he had his girlfriend and his friend Amir (ph). There were three of them, but there was - that was the whole crew. There was no sound. There was no makeup. There was no wardrobe. There was no - there was no one.
HENN: But, I mean, how do you even afford fake blood for $15,000?
BLUM: Fifteen thousand dollars is a lot. Fake blood is, like, $4. I mean, come on. You go to the store. You buy fake blood. It's $4.
SMITH: "Paranormal Activity" was basically the polar opposite of "The Fast And The Furious."
HENN: There were no car chases, no explosions, no computer-generated monsters - nothing.
SMITH: "Paranormal Activity" made $200 million. In all of film history, no film has ever made a bigger return on investment.
HENN: And this got Blum thinking. I mean, sure, not every movie could be as big a hit as "Paranormal Activity" and you can't really make lots of movies for $15,000. But what if you created a system that made lots of really cheap movies? I mean, some would be flops, but who cares? They're cheap. And once in a while, you'd get a little of that "Paranormal" magic - a certifiable hit. And when you did, you would make a fortune. Blum basically looks at films the way a venture capitalist in Silicon Valley looks at startups. He decided I'm going to make lots and lots of little bets and then let the market figure out who the big winners are.
SMITH: But to make this work, Blum had to fight every instinct of every Hollywood director. He had to force them to stop spending money, which is hard because all the kinds of standard Hollywood stuff is just off-limits.
HENN: Great movie, you love the movie, but the climactic scene is a giant explosion that brings down a building.
BLUM: Not - impossible - no. But if the - if there was no way to end your movie without seeing the big explosion of a building falling down on screen, not for us. We have to pass.
HENN: Airplane crash.
BLUM: Again, if you have to see it - I can hear someone talk about an airplane crash no problem. I could see a burning wing no problem. I could see ripped seats after the fact no problem. The actual airplane going down - not a jet. A prop plane we could do.
HENN: Car chase through a city.
BLUM: We've done them, but they are very - they do not - it looks nothing like "Fast And Furious" I'll tell you that. It's a very, very, very, very different version of that.
SMITH: Blum set up a production company - Blumhouse - and they started to churn out movies, horror movies and thrillers. And some names you might have heard of. There's "Insidious," "Sinister," "The Purge."
HENN: And there are also probably films you have never heard of, like "Stretch" and "Area 51." There's really almost no way for you to know they even exist because they were never advertised. They were never released in theaters. About 40 percent of Blum's movies go basically nowhere, straight to video or, like, buried in Netflix somewhere.
SMITH: Forty percent is a lot of movies. That's, like, half of his movies fail. That's incredible.
HENN: That's a schwarmulla (ph), right, but half are these huge, outsized hits, at least in terms of the return. So this is the man who is totally at peace with flops - Mr. Anti-Big-Budget Blockbuster. And he's approaching Rob Cohen - Mr. Blockbuster - the director of "The Fast And The Furious," whose career was kind of on the skids. And Blum says to Cohen, give all that up. Let's make a cheap movie together, and Cohen remembers.
COHEN: All of a sudden they started talking to me about a thriller with Jennifer Lopez.
HENN: The script is called "The Boy Next Door." It's, you know, your classic boy meets girl, girl falls in lust kind of, boy turns out to be a homicidal maniac.
SMITH: I hate it when that happens.
HENN: So common. But the script wasn't bad. Cohen would be given creative control, would get to work with a certifiable movie star - Jennifer Lopez - J. Lo. But there was this one catch - his budget would be $4.2 million.
COHEN: Which probably wouldn't cover my catering budget on "The Mummy."
SMITH: I know $4.2 million sounds like a lot, but in Hollywood math, that is low-budget. Still, Cohen said yes. And he approached making the movie almost like a game.
COHEN: You're going to have to be clever and that cleverness stretches you and makes you think outside the box because the money panacea isn't in your arsenal anymore. You have to fix the problems another way.
HENN: And so began the re-education of a big-budget Hollywood director. Jason Blum has this low-budget moviemaking thing down to a science. He has a series of rules.
BLUM: Should I give you the three rules of how to make a cheap movie?
HENN: Yeah, I want the three rules.
BLUM: OK, the three rules are not too many speaking parts.
HENN: There is a different pay scale for people who speak in a movie and people who don't.
BLUM: Extras are union and extras are paid - I think they're paid $80, $90 or $100 a day. Now, the funny thing is if an extra speaks, you have to pay an additional $400. So you'll notice - and not just in our movies but definitely in our movies too - like, when the waiter doesn't say anything or, like, this post office clerk doesn't say anything, there's a reason 'cause as soon as they do say something you got to give them a check for 500 bucks. So you don't want extras to talk 'cause it really costs you.
HENN: And then there's rule number two.
BLUM: Not too many locations. The most economical way to shoot a movie location-wise it to have it take place all inside a house. And you will notice a lot of our movies, in fact, do, but I would also say that that's where you're most vulnerable.
SMITH: Oh, right, 'cause it's your house and you think you're protected in there.
HENN: You know, except when there's a ghost who possesses your girlfriend or your boyfriend's a psychopathic killer.
SMITH: Except then.
HENN: And there is rule number three. This is probably the most important rule. And it's that stars, directors, producers, all of your talent, you pay them as little as it is legally possible to pay them. Blum says, when you work on one of his movies, you're not really an employee. You're more like an investor or a partner, and if the movie profits, you profit.
BLUM: So what we do is we have box office bonuses. So if you have made a million dollars on a movie in the last two years up front, I say to you, if the movie makes X amount of money, we're going to get you to your million dollars. If it makes beyond that, we'll get you more than a million dollars.
SMITH: The movie "The Boy Next Door" was designed with these three rules in mind. There are barely any extras.
HENN: There's a dance scene in the movie and you're, like, looking around, and you're like, are there people at this dance? Where is everybody?
SMITH: I'm also guessing most of them don't speak (laughter).
HENN: Oh, I don't think there's an extra in the entire movie who says one word.
SMITH: Also the movie mostly takes place in a house and a school - just two places.
HENN: And Jennifer Lopez and Rob Cohen are working for the minimum legal salaries. They're getting equity in the film. They get an ownership stake. But if the movie flops, they will earn next to nothing.
COHEN: It's definitely a gamble because it was like, tighten the belt for the better part of a year because the cash up front was idiotic.
SMITH: But as Rob Cohen starts mapping out the budget for this movie, deciding where he's going to spend and where he's going to scrimp, he starts to get worried because there is this key scene where the boy next door - the psycho boyfriend - cuts the brake line on J. Lo's family car. And her son gets in and starts driving down a mountain road.
HENN: This is a terrifying moment, right? And Cohen knows exactly how he wants to film this scene. This guy created "The Fast And Furious." He wants dramatic music. He wants car tires screeching around corners, sweat, white knuckles on the kid's hands at the wheel. And then finally, in a climactic moment, the car rushing toward a cliff But remember, this is a Blumhouse film. And that is not the Blumhouse way.
COHEN: That was something that in the original script was talked about as it happened offscreen. Yeah, what happened to your car? Oh, yeah, well, I don't know. The brakes went out and it's all right. We hit something, but it's - we're fine.
HENN: Cohen tells Blum this won't work.
COHEN: And I went you can't, you can't - you know, the boy next door has cut their brake lines so that they're going to get killed. You can't do that offscreen and talk about it. You have to show it. But then it was like, well, how can you afford it? I mean, how can - I mean, it can't be afforded. And then I went, oh, I think - I can.
HENN: So Cohen calls some old friends from "The Fast And The Furious" days and they give him a discount on one car chase scene.
SMITH: He knows a guy.
HENN: He knows a guy.
SMITH: But even a discount car chase cost hundreds of thousands of dollars, so Cohen is burning through his budget. And when it gets to the climactic scene, the scene where Jennifer Lopez starts fighting back, where she takes out Ryan Guzman - the evil boy-next-door boyfriend - at this critical moment and Rob Cohen is running out of cash.
HENN: He wants to burn down a barn in a scene. But he has to skimp on the fake fire. And not to, you know, spoil the surprise here, in the script, J. Lo is supposed to stab a hypodermic needle directly into Ryan Guzman's eye. Cohen, he wanted to build a prosthetic head and do the scene right, but he's basically completely out of cash. And it turns out, a fake head - one fake head - costs $24,000. So instead of stabbing the needle into an eye, he has to kind of fake the scene.
SMITH: Twenty-four thousand dollars is more than it cost to make "Paranormal Activity."
HENN: It's more than the cost of a used Camry. That's right.
COHEN: There is a way to give the audience they gut shot. And there's a way to make it like, yeah, OK, oh, that's - that's not nice or that's ooky (ph), icky. But then there's a way to make people go (yelling). And you want people to go like that at those moments. You want the whole audience going nuts.
SMITH: When they start editing the film, Cohen realizes they are in trouble.
COHEN: I'm seeing the deficiencies of the film and I'm not kidding. I'm not a guy after making - this was my 34th movie - I'm not into kidding myself about what's right and wrong. And I felt that in several areas of the movie we pulled the punches.
HENN: So Cohen and Jason Blum screened the film for some studio executives from Universal in a focus group. The reaction comes back meh. And then Cohen corners Jason in the theater that night and he says, look, I can fix this. Just give me a little bit more money. Give me one fake head, another take at the love scene so it's sexier than Lifetime television and a little bit more cash for more fake fire in the barn and we've got it. We will have a hit. I just need a little bit of cash.
SMITH: And Blum's response - no way.
COHEN: And his was, you know, we just don't have the money. We spent the money. You spent it. You were a partner. You spent every penny. You had the decision on every penny, and we just don't have any more. And I'm going, you have this whole, big company. What do you mean, you know? You have all these hit franchises. What do you mean you don't have any more? But he was adamant, and that's the fiendish deal.
HENN: Blum actually has a fourth rule for cheap moviemaking and it's ironclad. And it's this - never, ever break your budget. Never try to spend your way out of a problem. Economists actually write about this idea. It's called the sunk cost fallacy. Often companies and people who have spent a lot of money, or a lot of time on something, they're more likely to continue plowing resources into that project, even when it's a complete disaster. The sunk cost fallacy, it drives big-budget movies in Hollywood.
SMITH: But the Blum way says spend your budget, not a penny more, and if the film fails, it fails. There'll be another one. In fact, Blum had 10 movies in the pipeline for this year already. He expected four of them to fail. So he just thought, fine, "The Boy Next Door" will be one of the movies that fails.
HENN: But then Robert Cohen couldn't let it go. When Blum says no, no more money, Cohen just can't help himself. He reverts to his old Hollywood ways. He goes to the studio - Universal who was thinking about the distributing this film - and he says, look, if you guys can give me $300,000 - just $300,000 - I can get a couple extra days of shooting and I can make this great.
SMITH: Remember the sunk cost fallacy? Universal buys it, takes the bait, gives Cohen the money.
HENN: Cohen reshot the love scene, made it a little racier, added more fake fire to that moment in the burning barn, and he got his $24,000 prosthetic head.
COHEN: So you actually see Ryan's head and the needle going bonk right into the eye. And believe me, believe me, the audience reaction at that moment was unbelievable.
(SOUNDBITE OF FILM, "THE BOY NEXT DOOR")
RYAN GUZMAN: (As Noah Sandborn) You can trust me.
JENNIFER LOPEZ: (As Claire Peterson) I know. You can't trust me.
GUZMAN: (As Noah Sandborn, screaming).
HENN: So the audience reaction may have been over the top, but the critics' reaction was pretty awful. They hated this film. I actually have some of the reviews here. You want to read one?
SMITH: Sure. This one is from Variety, and it says, January releases don't get much more January than this.
HENN: And that's kind of an inside dig. January's when film studios dump all the bad movies. Here's one from The Washington Post. Though its studio - Blumhouse Productions - is best-known for the "Paranormal Activity" series and other fright fests, "The Boy Next Door" plays best as unintentional comedy.
SMITH: The final one from Plugged In is if only the boy would've stayed next door then we would've been spared this tacky, salacious, sexual, violent movie. That's rough.
HENN: So I asked Rob Cohen about the reviews and he basically started swearing, but really, he didn't give a damn because in the end, this movie was another Jason Blum financial success. Blum didn't have to pay for the re-shoots. He spent exactly what he planned - $4.2 million - but this film grossed more than $50 million at the box office.
SMITH: And for Cohen, that was it. That was redemption. Tons of people saw the movie. Tons of people bought tickets. He was back. It also didn't hurt that he did pretty well financially.
HENN: How much money are you going to make from this film?
COHEN: Probably between a $1.5 million and $2 million.
HENN: And how long did it take you to shoot it?
COHEN: Twenty-four days.
HENN: This year, including "The Boy Next Door," Jason Blum is on track to get 10 films released into theaters. They will have cost somewhere in the neighborhood of $50 million to make. And right now they are on track to earn half a billion dollars back.
COHEN: He's definitely considered now a genius that invented a new way to make a lot of movies and make a lot of money. And Hollywood in the end is all about money and success.
HENN: Awards are nice, too, and last year, Blum made a film called "Whiplash" that won 3 Academy Awards. But when I asked him about it, Blum said he's not going to start making arty, award-bait films. His mission is to make lots of little bets on lots of little movies, embrace his flops and force Hollywood to confront its fear of failure.
(SOUNDBITE OF MUSIC)
SMITH: We always want to hear what you think of the show. Send us an email - email@example.com. Or tweet us - @planetmoney.
HENN: Special thanks goes out to Kim Masters. Kim as a reporter at The Hollywood Reporter. And she has a great podcast called "The Business," which is all about the business of Hollywood. I would have been lost without her.
SMITH: Our episode today was produced by Frances Harlow and Jess Jiang.
HENN: And if you're looking for another show to check out, try the TED Radio Hour with Guy Raz. They're doing a two-part episode about our relationship with our phone and computer screens. You can listen to Screen Time on the TED Radio Hour right now. You can find it at NPR.org/podcasts or the NPR One app.
SMITH: I'm Stacey Vanek Smith.
HENN: And I'm Steve Henn. Thanks for listening.
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