Jason Blum — who struck out on his own as an independent producer in the early 2000s after leaving Harvey Weinstein’s Miramax — was haunted during those years by the fear that he would never succeed on his own.
That’s when he received a DVD of a tiny horror film titled Paranormal Activity that was shot for less than $15,000 by unknown filmmaker Oren Peli. Blum and others believed the film could be a hit and tried to find it a distributor. One door after another was slammed shut, but Blum wouldn’t give up and eventually helped garner the interest of none other than Steven Spielberg’s DreamWorks. Spielberg himself watched the movie and was thoroughly spooked, according to Hollywood lore.
DreamWorks and its then-partner Paramount Pictures first released the film in more than a dozen college towns in late September 2009 before rolling it out nationwide as Halloween approached. Paranormal would go on to earn $107.9 million domestically and $194.2 million globally to become one of the most profitable titles in Hollywood history. It also put Blum’s banner, Blumhouse, on the map and ushered in the Golden Age of the micro-budgeted horror pic that scared up multi-million dollar franchises such as Paranormal, Insidious and The Purge.
Blum made Universal his home studio per a lucrative deal that allows him creative autonomy, as well as the freedom to work with other studios. Among his many successes for Universal, he helped revive the Halloween franchise, and also returned to his prestige roots when producing Oscar winners such as Jordan Peele’s Get Out (2017) and Spike Lee’s BlacKkKlansman (2018).
Now, however, Blum’s long-ago fear of failure has returned in a reversal of fortune that began in 2024 and has continued in earnest this year, with all four of its 2025 releases becoming major box office misses, beginning with Wolf Man ($34. 1 million globally), The Woman in the Yard ($23.3 million globally) and Drop ($28.6 million globally).
But by far the most shocking failure was M3GAN 2.0, which bombed over the June 27-29 weekend and stunned Hollywood, considering it is a sequel to an unqualified hit. Released in January 2023, M3GAN — about an AI doll who takes on a life of her own with horrendous consequences — launched to $30.4 million domestically on its way to grossing $181.7 million globally against a mere budget of $12 million.
M3GAN 2.0, which cost at least $25 million to produce before marketing, opened to just $10.2 million domestically and $17 million globally.
So, what happened? Director Gerard Johnstone, Blumhouse and partner Atomic Monster, run by James Wan, decided to go in a different direction and make the M3GAN sequel more of a sci-fi action pic, whereby the doll becomes the protagonist in the style of Terminator 2: Judgment Day. Audiences simply weren’t interested in the about-face. Box office pundits and Hollywood insiders also question the wisdom of releasing the sequel in the far more competitive summer corridor.
Insiders at Blumhouse tell The Hollywood Reporter that the soul-searching within the company has already commenced. It is absorbing lessons from this tough year, and is reevaluating its slate through the lens of whether a horror film qualifies as a cinematic event in an era where the market for such fare is oversaturated. There’s also a recognition that Blumhouse’s ambition to release as many as 10 titles a year theatrically may be too grand, with Blum agreeing that the box office cannot withstand as many horror films as it used to, especially smaller single and titles. Most importantly, a course correction is required in terms of remembering what the Blumhouse horror brand means, with a key takeaway being that what has worked in the past does not necessarily work in today’s changing landscape.
The company is now looking ahead to October’s Black Phone 2, which is a pure horror feature, and December’s Five Nights at Freddy’s 2, which test audiences are said to have responded enthusiastically to. The first Freddy’s grossed a massive $297.1 million at the global box office to become the top-earner in Blumhouse’s history against a $20 million budget, not adjusted for inflation. Insiders at both Blumhouse and Universal are hopeful that the pic will restore the luster to the house that that Blum built.
One pressing matter facing Blumhouse is M3GAN 2.0 spinoff SOULM8TE, which hits theaters Jan. 9, 2026, and tells the story of an adult AI robot companion. While it’s to soon to say whether plans for the film will change, insiders say discussions are underway regarding the entire upcoming slate, including SOULM8TE, but add that the spinoff has tested incredibly well.
Blum himself decided to speak out proactively about M3GAN 2.0 and Blumhouse’s slump in a podcast interview with The Town’s Matt Belloni during the weekend of the film’s opening. He owned up to what may have gone so wrong.
“We all thought Megan was like Superman. We could do anything to her. We could change genres. We could put her in the summer. We could make her look different. We could turn her from a bad guy into a good guy. And we classically over-thought how powerful people’s engagement was with her,” Blum said, reiterating that the audience wasn’t ready to genre-swap. (He also admitted to being in “pain” all weekend.)
One horror producer familiar with the inner workings of Blumhouse couldn’t agree more, telling THR the film’s failure boiled down to hubris. “They thought they were being all clever changing the dates and the genres,” the person said. Adds another horror producer: “This was not the sequel audiences wanted. It was the movie that the director wanted.”
The good news: no one at Universal is freaking out about M3GAN 2.0 or Blumhouse’s recent slump, since its titles are far more modestly budgeted than most studio pics. “We would be having a different conversation if they weren’t responsible,” says one studio insider. “At the end of the day, every one of these movies will make money.” All told, the 42 releases from Blumhouse since it was founded in 2002 have grossed more than $6 billion at the worldwide box office (not all belong to Universal). The vast majority cost less than $20 million to produce, and in many cases, notably less.
“I said to [Blumhouse employees] this morning that if you look at any massive talent, whether they are a movie star or whether they are a production company or whether they are a studio, every one of your favorite people have gone through slumps. And that applies to Blumhouse, too,” Blum said in his The Town interview.
Comscore chief box office analyst Paul Dergarabedian says no one is immune to the traffic jam taking place currently at the summer box office, whether it’s family films going up each other or genre films such as 28 Years Later and M3GAN 2.0. He adds, “It’s playing out more like a cinematic gladiator school or a Dickensian marketplace, where it’s the best of times for some and the worst of times for others.”
—Borys Kit contributed to this story.