Why Blumhouse Has the Right Approach to Getting in Games

videogame controller

As top video game makers successfully translate IP into hit films and shows, it was inevitable that major Hollywood players would be gaming’s next newcomers.

Last month, Jason Blum’s horror-driven prodco Blumhouse announced the creation of its own gaming division, to be led by veteran video game producer Zach Wood (“Prey: Mooncrash,” “Twisted Metal”) and ex-PlayStation VP Don Sechler, who ran global operations at Sony’s console brand for a decade.

Blumhouse Games indicated its initial plan is to publish “indie budget” games costing under $10 million to produce, a strategy echoing the enduring success of the company’s cost-conscious film productions, most recently Universal’s evil-doll thriller “M3GAN.”

Having grossed close to $175 million on a $12 million budget, “M3GAN” is yet another example of horror’s viability at the box office at a time when critically lauded films from notable names are struggling to find an audience.

But video games are a different — and costly — beast.

HBO adaptation “The Last of Us” is a survival-horror franchise that is one of PlayStation’s most beloved and successful IP, but its 2020 sequel “The Last of Us Part II” was estimated to have cost $100 million to make.

More recently, 2022’s “The Callisto Protocol” was reported to have cost “PUBG: Battlegrounds” publisher Krafton around $162 million to make. The game underperformed, despite the fanfare behind its developer, Glen Schofield, who co-created EA’s “Dead Space” series, another staple of survivor horror.

EA’s own AAA remake of “Dead Space” shipped at the end of January to critical acclaim but launched to lower sales than “Callisto” did, per the U.K.’s tracking of physical game sales, calling into question whether it has met EA’s expectations.

Blumhouse is smart to wade into this business cautiously, especially since there are studios that know how to make games under tighter budgets.

Predominantly known for its “Layers of Fear” horror games, Polish studio Bloober Team made 2021’s “The Medium” for under $10 million and claimed it only took days for them to turn a profit, despite the more modest popularity of and reception to their titles. Alongside Annapurna Interactive, another Hollywood-based company making smaller games, Bloober is one of the developers working on Konami’s new slate of “Silent Hill” horror games.

Bloober also developed Lionsgate’s 2019 “Blair Witch” video game. Given Blumhouse’s creation of multiple horror franchises that could translate well to games, such as “Paranormal Activity,” “Insidious” and “The Purge,” Bloober is bound to be on the company’s radar for potential partners.

But if Blumhouse aims to turn a profit the way its films have, it may be more interested in live services.

The company just announced it is developing a film adaptation of multiplayer horror game “Dead by Daylight,” to be co-produced with James Wan’s Atomic Monster prodco as “M3GAN” was. Initially released for PC in 2016, “Dead by Daylight” pits players against a killer controlled by another player as they try to complete tasks and avoid getting killed. This formula proved popular enough for the game to go multiplatform and license many notable horror characters as it’s been updated over the years, including the main killer in the “Halloween” films that Blumhouse produced a trilogy for.

The company is also in the middle of shooting its adaptation of “Five Nights at Freddy’s,” a point-and-click horror game made in just six months on a microbudget. The title grew extremely popular upon its PC release in 2014, spawning numerous sequels and lucrative merchandise. The success of “Five Nights at Freddy’s” is undoubtedly the focal point of Blumhouse’s desire to break ground in gaming.

Still, it’s unclear just what kind of games Blumhouse wants to make. Turning its own film franchises into games could require licensing agreements with distribution partners that entitle them to cuts of sales, meaning Blumhouse could prioritize creating original IP to maximize profits.

If Blumhouse wants to cast notable actors in its games, that could also drive up costs. Supermassive Games, whose narrative horror titles have starred the likes of Rami Malek, Justice Smith and Jessie Buckley, ended up seeking an owner and became a subsidiary of Danish company Nordisk Film in 2022.

And while Bloober Team may be a relevant example of what Blumhouse wants to do, it too has sought financial assistance, as Chinese tech overlord Tencent became its largest shareholder in 2021.

All the more reason why now is the best time for Blumhouse to shack up with another prominent horror producer, James Wan’s Atomic Monster. The companies expect their planned merger to be approved over the summer.

Blumhouse may be taking a risk by entering the precarious gaming space, but it’s not doing so without the power of partnership.