How the company behind two of the year's biggest movies is blowing up the Hollywood playbook

Unless you own the rights to Marvel characters or you're a streaming giant with endless capital, the best way to make a buck in Hollywood these days is finding a niche but passionate audience for a particular subject, and make the content on the cheap.

Jason Blum and his company Blumhouse Productions have done just that, and now they're reaping the rewards.

Known for creating some of the most memorable horror franchises of the last decade like "Paranormal Activity," "Insidious," and "The Purge," Blumhouse has so far performed in 2017 at a profit level that has major studios envious.

How 'Split' and 'Get Out' became shockingly huge hits

Jordan Peele's new directorial debut "Get Out" gave Blumhouse (and the company's frequent partner in its releases, Universal) its second No. 1 movie at the domestic box office this year when it made $30.5 million just in opening weekend (on a $4.5 million budget).

"Split," the second M. Night Shyamalan movie produced by Blumhouse (the first was 2015's "The Visit"), spent three straight weeks at the top of the box office after opening in late January, and has earned over $195 million worldwide so far (on a relatively tiny $9 million budget) and brought some much-needed cachet back to the director once hailed for his blockbusters.

"Split" is, as of this writing, the second-highest-grossing movie of the year so far in the US, and "Get Out," despite only being out for less than a week, is also in the top 10.

"Blumhouse has been the Pixar of horror distribution for some time now," Jeff Bock, senior box office analyst at Exhibitor Relations, told Business Insider. "Most horror films take forever to get out of the red - Blumhouse's are usually in the black opening weekend, if not opening day."

Despite the success, Blum doesn't get caught up in his own hype. When Business Insider brought up the $20 million projection for "Get Out" in an interview last week, he lowered the expectations.

"We're projecting high teens," he said.

And yes, he's happy about how his recent releases are doing, but he's the first to acknowledge that good fortune can be a fickle thing in Hollywood.

"I think the movie business is cyclical and you have a few that work and a few that don't. For some reason they bunch up - I don't know why that is," Blum said. "That's the nature of the business and it's a lot more fun when the movies are working."

But the truth is it's hard to find something at Blumhouse that's not working. Its genre titles have grossed over $2.2 billion to date (its first movie came out about a decade ago). That's all the more remarkable because the company works on a micro-budget model that shoots for the moon using a souped-up jet instead of a rocket ship.

Blumhouse generally keeps production budgets under $5 million (it goes up to around $10 million for sequels), and almost never makes a distribution commitment for a project until it's completed and given a good once-over by Blum and his team. The company, with a staff of 45, has built an impressive catalog and fined-tuned development in a way that has nearly assured success across all of its titles.

What Blum learned from Hollywood mogul Harvey Weinstein

It's a by-the-bootstraps approach that was embedded into Blum early in his career. He was an executive in charge of acquisitions and coproductions for Miramax in the 1990s when it was then owned by Harvey and Bob Weinstein. The company was at its zenith - owned by Disney and making blockbuster deals for movies out of Sundance while also producing Oscar winners left and right.

"They really taught me the movie business," Blum said of working with the Weinsteins, particularly Harvey. "There isn't a day that goes by when I don't think, 'What would Harvey do?' Not that I always do it. Sometimes I think, 'What would Harvey do? I'm going to do it differently.' I think if I got one thing from Harvey it was to just keep busting down the door until you succeed. He really instilled that in me in a very profound way."

That was necessary when Blum went out on his own as an independent producer after leaving Miramax. He describes it as a low point in his career.

"I wanted to be an independent producer when I worked for Harvey. I did it for three or four years and I did not like it," Blum said. "I decided at that time I wanted to build a company and it took 10 years to do it, but this is absolutely my dream. I do not miss my days of making one or two movies a year. I thought I would love it, and I didn't like anything about it."

Blumhouse Productions' first release was the forgettable 2006 romantic comedy "Griffin & Phoenix," but then Blum came across "Paranormal Activity," a found-footage horror movie made for $15,000 by a video-game designer named Oren Peli. After it wowed audiences at a couple of film festivals in 2007, Blum got DreamWorks interested in the movie for remake rights, but he had another plan.

"I came onto the movie, I tried to sell it, everyone said it was a joke," Blum remembered. "But I knew anyone running a studio, if they saw the movie screened with an audience, would distribute the movie. My problem was I couldn't get anyone into a movie theater because I didn't have any clout, I was a nobody. The only thing I got was DreamWorks to agree to remake it and of course we were never going to remake the movie, but I couldn't say that. So what I said was I will sell you the remake rights to the movie but, and I put this in the contract: you guys set up and attending a test screening. And I said as long as you do that we'll sell the movie. And I said to Oren, 'I promise you you'll never remake the movie, you don't want to do it, I don't want to do it, it's never going to happen. But this is the only way I can get people who make a decision into a movie theater with people.' That's how we did it, and the rest is history."

The gamble worked. DreamWorks could not argue with the audience reaction and released Peli's original version in 2009. The movie went on to earn an astounding $193 million worldwide (it's one of the most profitable movies of all time, comparing budget to gross) and spawned five sequels.

Blumhouse's golden formula for movie success

Blum had found the formula to create a successful movie company: genre movies, made clever with up-and-coming directors, done with responsible spending.

"Insidious" and "Ouija" followed, which also turned into profitable franchises. Then in 2014 the company signed a 10-year first-look deal with Universal, which has led to last year's hit "The Purge: Election Year" and the just-released, critically acclaimed "Get Out" - which marks Blumhouse's eighth movie to earn six times its budget on opening weekend - as well as "Split," which could lead to the company's most ambitious franchise yet.

"This is a transformative moment for Blumhouse," Blum put it bluntly. "I consider 'Split' a Blumhouse 2.0 - a new act in the company."

Though Blum would not comment on a sequel, Shyamalan has already hinted on Twitter that he's working on one (warning: spoilers ahead), which will focus on the surprise ending in "Split," which revealed that the James McAvoy character in the movie lives in the same cinematic universe as Bruce Willis' David Dunn from Shyamalan's 2000 movie "Unbreakable." (Quite a feat seeing as "Unbreakable" is owned by Disney, which will likely have to team with Blumhouse, along with Universal, on any sequel.)

Then there's the highly anticipated relaunch of the "Halloween" franchise, which Blumhouse is producing with the full support of the movies' original creator John Carpenter, who will be executive producing. Director David Gordon Green and actor Danny McBribe joined the film with Green directing and the two sharing screenwriting duties (the movie is set for release in October 2018 and McBride has hinted that it's a continuation of the first two movies in the franchise.)

Green and McBridge aren't known for their horror chops, but as Blum showed with Peele's "Get Out," he thinks tweaking the preconceived notions of genres is a good thing.

"I think there's a real connection between scary and funny, and I think [Green and McBride] are incredibly talented," Blum said. "It's very shortsighted to think the only guy who is going to do a good horror movie is the guy who has done a good horror movie before. I think what 'Halloween' needs is an injection of different and present and edgy and I think those guys are as good as anybody at delivering that."

In an industry that, according to Blum, doesn't change by the day but "by the minute," he believes the only way to survive is by taking calculated risks. He sees the success of "Get Out" as the perfect example of what Blumhouse does best, and it's miles away from the major studios' thinking.

"Jordan's script had been around for quite some time, no one wanted to make it, and I understand why: It's bananas," Blum said. "We did it because I read the script and I thought it would be amazing. If you make something on a respectable budget, you can make weird stuff. Did I know it would be a hit? I had no idea. But I loved how weird it was.

"At studios, filmmakers have to come into a room with comparisons. I don't want that," he continued. "If you can compare it to something, it's less interesting to me. The most excited I get is when someone says, 'I just read something and I've never read anything like it before.'"