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LOS ANGELES (Hollywood Reporter) - Everybody loves a spooky mystery. Here's a good one: How the hell has "Saw," a horror flick made for $1.2 million and nearly dumped straight to video, spawned a franchise that has scared up more than $1 billion?
Given the films' enduring appeal amid a flood of horror product, it's a question whose answer provides insight into how to manage a low-budget franchise. And with "Saw V" opening on Friday, Lionsgate's strategy of releasing a new film each Halloween faces a crucial test. Last October's installment dipped from "Saw III's" $163 million in worldwide box office to $137 million, raising the question of how long the property can keep up its hugely profitable pace.
The "Saw" story is as simple as its premise. Australian duo James Wan and Leigh Whannell wrote a script about a pair of confined strangers manipulated by Jigsaw, a diabolical mastermind who forces them to make ghastly choices. They filmed a seven-minute short featuring Whannell with his head in a macabre bear trap, which the late producer Gregg Hoffman found and brought to partners Mark Burg and Oren Koules of Twisted Pictures in early 2003. They decided to turn it into a feature on the cheap.
The producers showed the short to Lionsgate, which picked up the rights and planned to release it direct to video. Burg and Koules retained ownership of the property, and co-writer/director Wan wisely sacrificed his upfront fee for a cut of the gross.
"It was perfect timing because Lionsgate as a company was just starting to grow," Koules says. "And it was a perfect film that the marketing department could get behind."
The film packed three midnight screenings at Sundance in 2004, and tests in suburban Los Angeles and Las Vegas scored so highly that Lionsgate decided to release the film in theaters, on October 29 as a Halloween treat. It opened at a startling $18.3 million and grossed more than $100 million worldwide.
"Saw II," helmed by music video and commercials director Darren Lynn Bousman, was greenlighted the weekend the first film opened. Then came the kicker: Fans bought more than $70 million worth of videos and DVDs of the first installment.
The "Saw" team shrewdly stood its blood-soaked ground on the weekend before Halloween for three consecutive years. While Lionsgate is far from the first studio to target that holiday with a horror release, its marketing team made this explicit by utilizing the tagline: "If it's Halloween, it must be 'Saw.'"
And it slaughtered the marketplace, tallying $153 million, $162 million and $137 million worldwide for the second, third and fourth installments.
"What they have done with 'Saw' is a very unusual approach," says Roy Lee, producer of recent horror films "The Strangers" and "Quarantine." "Making the release of a new installment of 'Saw' an annual event is something no other studio has been able to accomplish. It seems similar to the model of a television series. Look at '24.' Does anyone argue that they are beating the concept to death?"
Such old-school slasher properties as "Friday the 13th," "Halloween," and "A Nightmare on Elm Street" generated enduring horror villains Jason Voorhees, Michael Myers and Freddy Krueger. "Nightmare" even put New Line on the map in 1984 much the way "Saw" has boosted Lionsgate.
But the stewards of those popular franchises essentially took the money and ran, milking six, seven or 10 sequels without developing the story line or the main characters. As a result, the properties quickly thinned their returns and devolved into camp, with Freddy becoming a Borscht Belt one-liner machine. Such second-tier brands as "Child's Play," which was campy from the get-go, and "The Stepfather," which was airing on TV by its third installment, were never really that popular. Such recent successes as "Scream" and "I Know What You Did Last Summer" were self-referential, ironic and relatively expensive to make. "The Ring" and "The Grudge," both derived from Asian horror source material, have stalled after two films, as has the torture-porn movement typified by "Hostel."
"Saw," in contrast, is deadly serious. Its moralistic ethos of righteous living, designed and perpetrated by a methodical, intellectual madman, evolves while remaining consistent in the ways that count. The intricacy of Jigsaw's vision -- executed even beyond his death -- lends itself to repeat viewings.
"Any one of these movies could have been completely phoned in," says Steve "Uncle Creepy" Barton, co-founder and editor in chief of horror fan site DreadCentral.com. "But the people who make them are basically the same core group who have been working on every one of them. They keep twisting it. They keep giving you reasons to wonder, What is going to happen next?"
Using unknown talent and rewarding them with a continued role in the franchise also has paid off. "Saw's" cinematographer and editor have built their careers on the series, and David Hackl, the director of "Saw V," was a production and trap designer for the previous three films. Wan and Whannell have stayed involved throughout.
"Quite frankly, the reason we all bust our ass is it's really, really profitable to everybody involved," producer Burg says.
No kidding. In terms of return on investment, it might be one of the most profitable franchises ever. No single film's budget has exceeded $10.8 million (the first four together cost $26 million total), which also includes DVD-only cuts. Even with $20 million of prints and marketing outlays, episodes two, three and four were all profitable by the end of their opening weekends. The quartet has grossed $553 million in theaters and sold more than 24 million DVDs.
Merchandising is getting big, though it took Lionsgate five years to convince retailers like Target that "Saw" merchandise was mainstream enough to populate their shelves. "Saw"-themed haunted houses are multiplying, and the U.K.'s Thorpe Park will launch its "Saw -- The Ride" roller coaster in the spring.
But what happens if "Saw V" tanks? The worldwide gross of "Saw IV" was 84% that of "Saw III," and the law of diminishing returns makes each new sequel a riskier gambit.
And like zombies rising from the dead, other genre distributors are reanimating old classics to compete with the brand awareness of movies like "Saw." "The Birds," "The Last House on the Left," "Friday the 13th," "Nightmare" and "The Crazies" are just a few of those headed back to life in theaters. Rogue is working on a sequel to Lee's $59 million-grossing "The Strangers."
"Saw" producers, citing recent tracking and European sales, are undeterred. "If this movie doesn't open giant, I think we'll all be disappointed," Burg says. "When that happens, we'll stop."
"There will be that day," says Koules, who denies that a straight-to-DVD release would ever be a likely option. "I'm not being cocky, but I don't think we're there yet."
Unsurprisingly, Koules and Burg have spent the past month with writers working on a sixth installment that will be greenlit if the script passes muster and the fifth performs as expected.