Let's Get Scared: Why Horror Movies Are Immune to the Digital Onslaught (Video)

Box office: Tentpole-obsessed Hollywood could learn a lot from the low-cost model of horror films

Horror fans got the memo long ago, and have no reason to waver now: Don't watch alone.

While an onslaught of home-based entertainments erode moviegoing in general, there's something about the communal experience of being scared that still attracts a crowd to multiplexes, experts say. The astounding success of “Insidious: Chapter 2” once again proves that horror has become the movie business’ most durable genre.

“Horror movies play much better in packed theaters than they do in a living room by yourself — that's the way people prefer to digest a horror movie,” Phil Contrino, senior analyst with BoxOffice.com, told TheWrap.

Horror movies are also extraordinarily cost-efficient; they rarely require extensive and pricey special effects or major stars. “Insidious: Chapter 2” dominated the weekend box office, racking up $41 million and making back its $5 million production budget in its first full day of release. Financiers quickly announced plans for a third installment.

Also read: Third ‘Insidious’ Film in the Works

But it's simply the latest in a steady stream of horror hits that have been scaring up big returns this year. “The Conjuring,” “The Purge,” Mama” and several other titles have all carved out a niche for themselves, despite being produced for a fraction of what most films cost to make.

“The Purge,” for example, cost a mere $3 million to produce, while “The Conjuring” required just $20 million. They made $64.5 million and $135.4 million respectively in North America, giving their studios the kind of capacious profit margins that are becoming an endangered species.

“It's a genre that is less dependent on big budgets than other genres and that doesn't need lavish marketing or explosions,” Bruce Nash, founder of the box office website The Numbers, said. “These kind of movies thrive on social media guerilla marketing and word-of-mouth support.”

The innovative compensation structure allows filmmakers to keep the costs down. For instance, Blumhouse Productions, which produced “The Purge” and “Paranormal Activity” in addition to “Insidious: Chapter 2,” pays its directors and top talent with profit participation in place of a big salary.

Also read: What’s the Deal? Horror Movies Don’t Scare Top-Tier Actors Anymore (Video)

“You bet on yourself and if you deliver everyone gets rewarded,” Blumhouse Productions founder Jason Blum told TheWrap last summer shortly after the success of “The Purge.” “When you have people who are only getting paid if the movie makes money, it means everyone's interests are aligned.”

It's a structure that is lifted from Silicon Valley, where executives like Amazon's Jeff Bezos and the late Apple co-founder Steve Jobs traditionally preferred to take their compensation in the form of stock. It turned out rather well for them, too.

With the cost of major movies routinely topping out at between $150 million to $250 million, finding new compensation structures for Hollywood's top stars could be critical. The makers of costly duds like “R.I.P.D.” and “White House Down,” which featured expensive stars like Jeff Bridges and Channing Tatum and still face an uphill climb to profitability, should take a note.

But there are other lessons as well.

While comedies also offer the shared experience of laughing in a theater, heavy dialogue and cultural differences make them a tougher sell overseas. Not so for horror, which translates easily. “The Conjuring” added $135 million to its overall haul from foreign territories and recent releases like the remake of “Evil Dead” and “Mama” essentially matched or even surpassed their domestic totals in overseas markets.

Also read: ‘Insidious: Chapter 2′ Jolts Expectations With $41M Haul at Box Office

“The primal urge to be scared is just something that resonates worldwide,” Jeff Bock, a senior analyst for Exhibitor Relations, said. “Given that they play so well in other countries, it's surprising there aren't more horror movies made. They're such a shot in the arm to the box office.”

The low-cost model employed by Blum is one that he and his disciples swear by. The cost constraints actually force the filmmakers to be more creative, and that shows in everything from how scary scenes are staged to the way studios use social media sites like Twitter to draw crowds.

And don't look for the filmmakers to turn their backs on their low-budget past. Blum insisted to TheWrap that he did not equate the size of a film's budget with success. Asked what he would do if offered $100 million to make any film, Blum replied, “I’d use it to make 35 movies.”

He's not just a penny-pincher. After a summer that relied on bombast to lure the fickle teenage crowd, the breakdown of “Insidious: Chapter 2”s’ audience is instructive.

Also read: J.K. Rowling on Why She Decided to Return to Wizarding World of Harry Potter

This was an R-rated film that appealed to and attracted a younger set on a wide scale. Sixty two percent of the audience were 25 years or younger, according to polling data released by the studio.

Of course, members of that particular demographic have many demands on their time and attention — one thing that the horror genre has done well is to make sure that audiences don't have to wait long for new installments in their favorite franchises.

After all, a year separated the two “Insidious” movies and a new “Paranormal Activity” movie has arrived like clockwork nearly every year out of the past five (except 2013, though two are coming next year). It's no accident that FilmDistrict and Blumhouse unveiled plans for an “Insidious” sequel before many theaters had finished tallying the ticket sales from last weekend.

“We live in an ADD culture,” Contrino said, “so if something is on a hot streak you have to strike fast.”