Paramount may produce 'Paranormal Activity' sequel

Can lightning strike twice?

Paramount Pictures is hoping so, as the studio is actively considering producing a sequel to "Paranormal Activity," the out-of-the-blue horror flick that cost $15,000 to produce and has sold $62.5 million worth of tickets so far domestically.

"We have the rights on a worldwide basis to do 'Paranormal 2' and we're looking to see if that makes some sense," Paramount Chairman Brad Grey said in an interview today.

In an industry obsessed with building franchises, a second "Paranormal Activity" seems like a no-brainer. The studio acquired the movie for just $300,000 and has spent less than $10 million on marketing, relying primarily on word-of-mouth and Internet buzz. It is on track to gross more than $100 million domestically. That would make it, Grey said, the most profitable film for  Paramount since he took over in 2005 and, quite possibly, in the studio's history.

Producing follow-ups to low-cost movies that unexpectedly capture the nation's attention can be difficult, however, making a "Paranormal" sequel a potentially perilous task for the studio. "Book of Shadows," the 2000 follow-up to 1999's indie horror phenomenon "The Blair Witch Project," was very poorly received and grossed just $26.4 million domestically, compared to $140.6 million for the original.

Paramount has an extra reason to make a sequel to "Paranormal Activity" beyond trying to duplicate its success: Although the studio has only domestic rights to the current film, it would have worldwide rights to a follow-up, Grey noted.

If it owned the movie overseas as well, "Paranormal Activity" would be even more profitable for Paramount. The film, which starts playing in foreign countries Friday, is being sold to international distributors by IM Global.

-- Ben Fritz

Photo: Katie Featherston and Micah Sloat in "Paranormal Activity." Credit: Paramount Pictures

Paramount fills long-empty home entertainment slot

After five months without a president of worldwide home entertainment, Paramount has promoted Dennis Maguire, who previously oversaw DVD sales overseas, to the post.

Maguire became president of Paramount Home Entertainment International in 2006 after holding the same post at Walt Disney Studios, where he worked for 23 years.

He replaces Kelley Avery, who unexpectedly left the job in May. Avery had previously overseen home entertainment for DreamWorks and took the job at Paramount when it acquired her former employer in 2006.

Maguire takes the job at a time when DVD sales, which have been a cash cow for movie studios for the last decade, are rapidly declining and studios are determining how to handle fast-growing but less profitable rental businesses such as Redbox and Netflix, as well as attempting to boost sales of high-definition Blu-ray discs.

"There are a lot of challenges in home entertainment, and it's good to have someone in the job I'm comfortable with and know well," said Paramount vice chairman Rob Moore, to whom Maguire reports. "He feels ready to take on bigger challenges."

Maguire worked with Moore to negotiate the studio's unique deal with controversial DVD kiosk company Redbox, under which the studio is studying its effect on sales this fall before potentially triggering a five-year, $575-million deal at the end of the year.

Moore has been directly overseeing Paramount's domestic DVD business since Avery's departure in May.

--Ben Fritz

Photo: Dennis Maguire. Credit: Paramount Pictures.

'Paranormal Activity' outdoes estimate by 12%

Sunday was a scarier day at the box office than we thought. 

"Paranormal Activity" was already set to break records this weekend based on Paramount's ticket sales estimate yesterday morning. But the low-budget horror film blew past that estimate with much stronger than expected returns on Sunday: $2.4 million instead of the expected $1.6 million. That's a difference of about 50%.

The movie ended up collecting $7.9 million over the weekend, substantially more than the $7.066 million that Paramount predicted on Monday. While studio estimates are sometimes off by a few percentage points, it's rare that they under- or overestimate by more than 10%, as happened with "Paranormal Activity."

Studios base Sunday morning estimates on similar films that collected a similar amount of money on Friday and Saturday. When movies significantly outperform their estimates, it's usually a sign that word of mouth is tremendously strong, driving better-than-expected Sunday attendance.

Average ticket sales per theater for "Paranormal Activity" were $49,379, the highest ever for a movie playing at more than 100 locations.

The movie, which cost $15,000 to produce and on which Paramount has spent around $2 million for marketing so far, has already grossed a total of $9.1 million domestically. 

Actual ticket sales for the weekend's No. 1 movie, "Couples Retreat," came in at $34.3 million. That's $1 million, or 3%, less than Universal's Sunday estimate.

--Ben Fritz

Photo: Katie Featherston and Micah Sloat in "Paranormal Activity." Credit: Paramount Pictures

'Paranormal Activity' to play outside of midnight after another strong weekend

"Paranormal Activity" is turning into a scary box office phenomenon for Paramount, putting up the second-highest per-theater average of any movie this weekend despite only playing midnight shows.

The ultra-low-budget horror film sold $535,000 worth of tickets at 33 theaters, averaging $16,000 at each. That's the biggest average of any movie this weekend except the new Coen Brothers picture, "A Serious Man."

It's particularly impressive given that "Paranormal" played only three times at each theater, at midnight on Thursday, Friday and Saturday nights. Most movies play four or five times per day at each theater -- 12 to 15 shows for the weekend -- and even more if they are on multiple screens.

Now that virtually every midnight show has sold out for the last two weekends, Paramount plans to move the film outside of the witching hour starting Friday and schedule show times throughout the day. It is also expanding "Paranormal" to 10 more markets, bringing the total to more than 40.

Paramount has very precisely opened "Paranormal Activity," which was originally bought by its former subsidiary DreamWorks Studios with the intention of creating a bigger-budget remake, in hopes of generating "Blair Witch Project"-like buzz. The movie played in 12 college markets last weekend, and Internet feedback has helped to determine in which cities the film will show.

Next weekend will test whether the studio's carefully cultivated online and media buzz is reaching beyond the young, late-night horror crowd.

-- Ben Fritz

Photo: Katie Featherston and Micah Sloat in "Paranormal Activity." Credit: Paramount Pictures

'Paranormal Activity': Do midnight sell-outs suggest it's the next 'Blair Witch'?

Producer Jason Blum spent nearly two years bringing the ultra-low-budget thriller "Paranormal Activity" to theaters. "It finally feels," he says, "like we're entering the third act."

When Blum saw long lines snaking around the ArcLight Hollywood last weekend for midnight showings of writer-director Oren Peli's $15,000 tale of things that go bump in the night, he choked up. Had he visited the box offices selling tickets for this coming weekend's late-night showings, Blum might start bawling like a baby.

After taking the movie to a dozen college towns for a series of midnight-only screenings last week, Paramount Pictures is cautiously expanding the film's release, adding another 21 cities. The film will be shown in midnight-only screenings on Thursday, Friday and Saturday night, and theater owners say few seats are left for many showings. The ArcLight (which has other late-night screenings besides midnight) already has sold out many of this weekend's shows.

"The sales are incredible," says Maurice Peel, a manager at Santa Cruz's Nickelodeon & Del Mar Theatres. "We are looking to sell out every show this weekend."

"People are coming from Pittsburgh, Indianapolis -- four or five hours away," says Eric Brembeck, the owner of the Studio 35 Cinema & Drafthouse in Columbus, Ohio. The demand for "Paranormal Activity" is so strong, Brembeck says, that he's thinking of finally getting an online ticketing service for his 300-seat auditorium.

"I haven't seen anything like this for a long time," says Michael Stockhaus, a senior manager at the AMC Loews Universal Cineplex 20 in Orlando. "The level of excitement -- I can't compare it to anything. You just didn't see it coming."

It's far too early to tell if "Paranormal Activity" can approach the success of the almost as inexpensive  "Blair Witch Project," which grossed more than $140 million in 1999. But the early indications for "Paranormal Activity" -- lots of Tweets, Yahoo searches and online demands to bring the film to cities around the country -- are encouraging. What's more, the movie is selling out with hardly any paid advertising.

On Oct. 9, Paramount will bring "Paranormal Activity" to a total of 40 markets, with showings at all hours. It will be over that weekend, most likely, when the industry will know if the film is a true phenomenon or a flash in the pan. "It's not like we're opening Champagne yet," Blum says. "But we just continue to get positive responses: 'It's the scariest movie I've ever seen.' "

-- John Horn

'Paranormal Activity' moves into wider release

Following "Paranormal Activity's" robust debut in a handful of midnight screenings last weekend, Paramount Pictures said Monday that it is bringing its micro-budget thriller to 20 more cities on Friday. Paramount said more than 200,000 fans have registered interest in the movie via a "Paranormal" website, and writer-director Oren Peli's $15,000 movie about a couple's nocturnal nightmare will be coming to many of the cities representing the greatest interest.

The studio said the cities with the highest demand for exclusive midnight showings included Los Angeles, Chicago, New York, Dallas, Houston, San Diego, Phoenix, San Francisco and Philadelphia. The movie will also come to Atlanta, Miami, San Antonio, Las Vegas, Minneapolis, Denver, Detroit, Baltimore, Sacramento, San Jose and Tampa.

-- John Horn

Photo: A scene from "Paranormal Activity." Credit: Paramount Pictures

'Paranormal Activity' expanding after selling out nearly all midnight shows

"Paranormal Activity" is scaring late-night college crowds just like Paramount Pictures had hoped.

Twelve college towns played the ultra-low-budget horror film at late-night screenings Friday and Saturday, and virtually all sold out. The sole exception was in State College, Pa., where a Penn State football game Saturday evening left a show at about 75% capacity, according to the studio.

Numerous theaters reported sellouts hours before screenings started, indicating that the studio's strategy to build "Blair Witch Project"-like buzz from college students was a success.

Based on the positive response, Paramount is putting together expansion plans and will start rolling out the film in new markets Friday, where it will continue to show "Paranormal Activity" in late-night screenings only.

One factor in Paramount's determination of where to take "Paranormal Activity" next is a "demand it" feature on the movie's website, where about 200,000 fans have requested screenings in their cities. Los Angeles is currently on top of the list, with 14,196 requests, followed by New York and Chicago.

"Paranormal Activity" was acquired by DreamWorks nearly two years ago. Initially, the studio planned to produce a bigger-budget remake, but after getting positive responses from industry talent who saw the film, including Steven Spielberg, it decided to release it as is. The movie stayed with Paramount Pictures after DreamWorks left its former parent company last year. (For more on the history of "Paranormal Activity," read this Times story.)

-- Ben Fritz

Photo: A scene from "Paranormal Activity." Credit: Paramount Pictures

Paramount Pictures spokeswoman Patti Rockenwagner is leaving

Patti Rockenwagner is leaving Paramount Pictures after just 16 months as executive vice president of corporate communications for the movie studio.

Rockenwagner joined the studio in May 2008 from Time Warner Cable Inc., where she was vice president of communications for Southern California. She is leaving "to pursue another opportunity," according to an e-mail that Chairman and Chief Executive Brad Grey sent to Paramount staff this afternoon. Rockenwagner will stay with the studio through October, he wrote.

No immediate replacement for Rockenwagner has been named. She replaced Janet Hill, who left Paramount in 2007.

Rockenwagner declined to comment on her future plans or say why she was leaving Paramount after such a short stint. 

-- Joe Flint

New Batman video game a major hit, G.I. Joe game disappoints

Warner Bros. may not have a new Batman movie this year, but the Caped Crusader is turning out to be the biggest thing in Hollywood-licensed video games.

Batman: Arkham Asylum sold 593,000 units in August according to NPD Group, which tracks industry sales. It's the biggest first-month sales for any video game this year based on a Hollywood property and particularly impressive given that Arkham Asylum was released Aug. 25, meaning NPD only tracked its sales for five days.

Warner said last week that Arkham Asylum, which received stellar reviews, had sold nearly 2 million units worldwide through Sept. 8, a very strong launch for a video game.

Though Warner Bros. didn't publish the game, it will benefit financially from Arkham Asylum in two ways. As the licenser to publisher Eidos, it receives royalties on game sales. In addition, Warner Bros. Interactive Entertainment, the studio's video game publishing unit, handled sales and marketing in the United States on behalf of Eidos and gets a percentage of the game's domestic revenue for those services.

Some in the video game industry criticized Warner Bros. last year for failing to release a video game alongside the hugely successful "The Dark Knight." Electronic Arts had started development on a Dark Knight game but scrapped it because of production problems. However, Arkham Asylum, which features an original story in which Batman is trapped in the prison that houses many of his most dangerous foes, has been extremely well received by reviewers and seems to have benefited from a release in the historically barren month of August, when an annual sequel to Madden NFL usually scares off all potential competitors.

G.I. Joe: The Rise of Cobra, the only other major video game based on a Hollywood property to be released in August, was a flop. Electronic Arts' adaptation of the Paramount film sold just 136,000 units all month despite being released Aug. 3. Hasbro, maker of the G.I. Joe toys, was the primary licenser to EA, though Paramount had an interest in the video game and other related merchandise.

-- Ben Fritz

Photo: A scene from Batman: Arkham Asylum. Credit: Eidos.

$1 Redbox DVD rentals could pinch Internet video services, study finds

Apparently there's more to fear in Redbox's $1 DVD rentals than meets the eye.

The leading DVD kiosk vendor has done deals with half of the Hollywood studios (Lions Gate Entertainment, Sony Corp. and Paramount Pictures), while the other half (News Corp's 20th Century Fox, Warner Bros. and NBC Universal) have sought a waiting period to protect sales of movies new on DVD.

A study from SNL Kagan finds that online video-on-demand services like Apple Inc.'s iTunes could suffer if consumers start to think $1 is the right price for a movie rental.

Kagan examined the cost of delivering online video at six levels of quality, based on assumptions about the average Internet speed, movie length and delivery cost.

Only in the two lowest-quality instances (known as standard definition) did Internet on-demand services come out ahead when rentals cost $1. After subtracting delivery costs and the studio's cut of 70 cents, the profit could be measured in pennies: 8 to 19 cents.

But at $3.99, every flavor of Internet video, including high-definition, delivers a profit, Kagan found.

The implications of the rental-for-a-buck are ominous.

"It could just have earth-shattering consequences to these services hoping to reach people through the Internet," said Wade Holden, the Kagan entertainment industry analyst who crunched the numbers.

Holden said Internet delivery costs could take years to come down enough (through more-efficient video compression and higher bandwidth rates) to make 1-dollar on-demand rentals economically feasible.

A going rate of $1 would gut the rental market, which Kagan projects at about $8 billion this year for 1.74 billion rentals.

"It would be a colossal shift for the rental market to go from $8.03 billion to $1.74 billion — a change studios are likely not to get on board with," Holden wrote in a report issued Aug. 31. "If that were to happen, revenue sharing would most likely not be an option and VOD providers would have to pay massive licensing fees to studios looking to maintain their revenue streams."

--Dawn C. Chmielewski