The film that jolted Spielberg into ‘Yes’

Steven Spielberg was certain his copy of “Paranormal Activity” was haunted.

It was early 2008, and the director’s DreamWorks studio was trying to decide whether it wanted to be a part of the micro-budgeted supernatural thriller. As the story goes, Spielberg had taken a “Paranormal Activity” DVD to his Pacific Palisades estate, and not long after he watched it, the door to his empty bedroom inexplicably locked from the inside, forcing him to summon a locksmith.

While Spielberg didn’t want the “Paranormal Activity” disc anywhere near his home -- he brought the movie back to DreamWorks in a garbage bag, colleagues say -- he very much shared his studio’s enthusiasm for director Oren Peli’s haunting story about the demonic invasion of a couple’s suburban tract house.

“Paranormal Activity” was hardly a typical studio production. Peli, an Israeli-born video game designer who had no formal film training, shot the $15,000 movie in a week in 2006 with a no-name cast, a crew of several San Diego friends and a hand-held video camera.

But as Spielberg and the DreamWorks team believed, the movie held a special appeal -- it was original and scary. The challenge was to fit this round peg into a DreamWorks square hole -- a process that would ultimately take more than a year and a half, the delay exacerbated by the slow collapse of Paramount’s acquisition of DreamWorks. For a time, it looked as if Spielberg was right: “Paranormal Activity” appeared cursed -- to sit on a shelf.

But now, supported by one of the more unusual marketing and distribution strategies conjured up for a studio release, Paramount is finally opening the film in 13 college towns on Friday, with a wider national rollout planned for mid-October. Scary movies are a dime a dozen these days -- at least 75 horror movies have been released theatrically in the last three years -- and “Paranormal Activity” doesn’t have the franchise awareness or recognizable actors that help separate a handful of genre films from the teeming herd.

Yet as preview and film festival audiences can attest, “Paranormal Activity” exhibits something many fright flicks don’t -- goose-bump inducing, gore-free scares. Now it’s up to the film (and Paramount) to translate Internet buzz into a “Blair Witch Project”-style phenomenon.

“The movie could be stratospheric, or it could just become a cult favorite,” says Stuart Ford, the chief executive of international sales agent IM Global, which sold “Paranormal Activity” to more than 50 foreign distributors. “It just depends on whether the studio can catch a wave.”

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An abnormal route

“Paranormal Activity” has beaten the odds before.

Hardly any micro-budget movie ever escapes its creator’s basement, and to travel all the way to the slate of a studio that releases “Star Trek” and “Transformers” -- that’s beyond exceptional.

“Once every five years, a guy makes a movie for a nickel that can cross over to a broad audience,” says “Paranormal Activity” producer Jason Blum, who, as a senior executive at Miramax Films, had a producing credit on “The Reader” and acquired the supernatural thriller “The Others.” “And there are about 3,000 of these movies made every year, so this film is about one in 15,000.”

In late 2007, Blum’s producing partner Steven Schneider came across “Paranormal Activity,” which follows a young couple who videotape themselves (including their nocturnal activities) to figure out who -- or what -- is tormenting them at night. An assistant at the Creative Artists Agency had seen Peli’s movie in 2007’s Screamfest Film Festival, and CAA, which signed Peli, sent out DVDs to anyone who would take one, looking for a theatrical distributor for the film and future jobs for Peli as a director.

No one stepped up to distribute the movie, but Schneider and Blum thought Peli’s first feature was so compelling that it deserved better.

Peli had grown up fearing phantoms -- he couldn’t even stomach “Ghostbusters” -- and channeled that fear into a relatively simple story about a young couple (Micah Sloat and Katie Featherston play the man and woman, also named Micah and Katie) who hear some very strange bumps in the night. Determined to discover the source of the disturbance, Micah starts videotaping everything, taunting the demon to show itself -- which it ultimately does (in a manner of speaking). The acting is intentionally unpolished, as is the herky-jerky camera work.

Blum worked with Peli to trim “Paranormal Activity” and tried to place it with the Sundance Film Festival. Sundance passed, but the nearby Slamdance Festival accepted the film. Still, no one stepped up to release it.

Ashley Brooks, a production executive at DreamWorks, was one of the only studio types who believed in “Paranormal Activity,” and continually pestered her boss, production chief Adam Goodman, to watch the movie. Goodman finally did, and on his and studio chief Stacey Snider’s recommendation, so did Spielberg.

“It’s what you don’t see that scares you,” Goodman says. “What’s really scary in the movie is a door closing half an inch.”

The DreamWorks deal for “Paranormal Activity” didn’t include a theatrical release. Instead, the studio planned to remake the film, with the greenhorn Peli directing the bigger-budgeted version (his original film would be included with the remake’s DVD). “They didn’t really know what to do with it because it’s not part of a usual studio business plan,” Blum says. “But they wanted to be in business with Oren.”

Blum and Peli, knowing that the movie played much better in a theater than on a TV set, wrote language into their deal that DreamWorks had to hold one “Paranormal Activity” test screening before starting the remake.

“You watch it in your bedroom, it can look like your kid made it,” Blum says of the low-tech movie shot almost entirely inside one house. “You watch it with an audience, it’s an entirely different experience.”

The film’s fate was about to change yet again.

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Not bored -- scared

Goodman had invited several screenwriters to the March 2008 test screening in Burbank in the hopes of seeing not only which scenes worked but also whether the writers were interested in working on the new version. Not long into the screening, some of the moviegoers started walking out. “I thought this was one of the worst previews I’d ever been a part of,” Goodman says.

The exiting audience members said they weren’t bored but scared (other early spectators have echoed that sentiment, while a handful have found the movie implausible and silly). Before the movie was finished, Snider and Goodman started talking about abandoning their remake and instead releasing Peli’s original movie, perhaps a bit shorter and with a new, more surprising ending that Goodman and Spielberg suggested.

Not long thereafter, however, the rift between the heads of DreamWorks and Paramount (which bought DreamWorks in 2005 and distributed the company’s films) grew toxic, and “Paranormal Activity’s” future turned uncertain. “Basically, everything between DreamWorks and Paramount was put on hold, and we didn’t know where the movie was going to end up,” says Peli, who’s about to start filming his second feature, an original, found-video thriller called “Area 51.” Yet even as it sat on Paramount’s shelf, “Paranormal Activity” continued to generate interest.

In November 2008, Ford’s IM Global showed the film to international buyers. Just as Peli and Blum had done, Stuart invited dozens of older teens and young adults to sit alongside 150 buyers in a Santa Monica theater. “It was nothing short of riotous,” Stuart says. “In the next 24 hours, we sold out all the international rights in 52 countries.” But it was not until Goodman took Paramount’s top production job in June 2009 that “Paranormal Activity” found a place on the studio’s fall schedule.

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Net-buzz marketing

Two weeks ago, rain was coming down in a hard drizzle at the Telluride Film Festival, and as midnight approached, the several hundred festival guests wrapped themselves tighter in blankets, tarps and ponchos as they tried to stay warm. The free, outdoor “Paranormal Activity” screening at this year’s Labor Day festival scarcely benefited from the cold, wet weather, but few in the audience left early. By the next day, positive Internet reviews and tweets were flowing in, a process that was repeated a week later at the Toronto International Film Festival, where the movie was shown outside of the festival program.

It’s exactly that kind of moviegoer enthusiasm that Paramount will need to make “Paranormal Activity” into something more than a strange little Hollywood anomaly. In a way, it’s an extension of what the studio did with last year’s alien-invasion “Cloverfield,” which Paramount kept under wraps while trying to fan the flames of Internet chatter.

On Thursday night at midnight, “Paranormal Activity” will be shown in the seven cities (including Los Angeles, at the ArcLight) that are simultaneously hosting the genre film Fantastic Fest. On Friday, Paramount will take the film to midnight screenings in a baker’s dozen of college towns: Austin, Texas; Seattle; Columbus, Ohio; Santa Cruz, Calif.; and Tucson among them.

After that? The audience will decide.

The studio’s expectation is that as word-of-mouth builds (Paramount is installing Web cameras in theaters so fans can record their impressions), people who haven’t seen the film will use the (eventful.com/demand) to request that Paramount book the movie into their towns.

The Internet service has been used by music fans who want bands to play a local gig; Paramount says the “Paranormal Activity” application is Demand’s first for a movie.

“If you get enough interest and it catches on and really works, you could use Demand for two or three weeks in October, and then put it out normally, with reviews, by Oct. 30,” says Megan Colligan, Paramount’s marketing co-president. “It allows us to be really responsive to what is actually happening.”

The movie’s actors, as well as its writer-director, will not be a part of the film’s initial marketing effort. “The less people know about ‘Paranormal Activity,’ the more they enjoy it,” the 39-year-old Peli says. “I don’t think there’s anything to be gained by putting the filmmakers and the cast in front.”

The filmmaker, who has since left his video game company, says he’s relieved that after nearly two years of waiting his movie finally will have its shot.

“It was not fun to sit and wait,” he says.

While it’s highly unlikely “Paranormal Activity” can come close to the success of 1999’s “The Blair Witch Project” (a $35,000 production that grossed almost $250 million worldwide), Peli and Blum hope the film can teach the old dogs of Hollywood a new trick.

“It really demonstrates,” says Blum, “how to do more with less.”

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john.horn@latimes.com