Owen, as he walked toward his parents' house, was thinking about Paranormal Activity.
Beyond the impact of the interview, the month of November had come to an end. And with it, the theatrical run of Paranormal Activity officially concluded worldwide. Between Tuesday the 29th and Wednesday the 30th, the film added an additional $145,000.
With that final push, Paranormal Activity closed its run in theaters with a global box office total of $143,035,000.
This means it multiplied its budget by 7,151 times, placing it in first place in history for return on investment. In second place was The Blair Witch Project (1999), with an ROI of 4,143 times its budget.
The gap between the new number one and the former record holder is, quite simply, abysmal.
Owen, who owns 20% of the post-theatrical profits, will receive a total of $14,303,500 deposited into his bank account corresponding to that participation.
But this is where a crucial detail comes into play: taxes.
For income at that level, the 37% Federal Income Tax applies. The full calculation is more complex, Owen hired a specialized accountant with his father's help, but in practical terms, what he has to pay in taxes on the direct income from Paranormal Activity is the following:
$14,303,500 × 0.37 = $5,292,295 in taxes
That leaves Owen with $9,011,205 in net money that he can use however he wants.
Added to his current assets, he doesn't even reach $9.5 million. And he also has to consider that he will need to pay taxes not only on box office profits, but also on everything he earned from YouTube, his acting roles, sponsorships, and other side income streams. He hasn't settled any of that yet, but in January he will have to file his full annual tax return and pay what is due.
Of course, income from AdSense, sponsorships, his acting roles in The Spectacular Now and The Hunger Games, and the sale of his screenplay are taxed differently: 15.3%, much lower than the 37% applied to the extraordinary profits from the film.
Even so, the conclusion is that he would still be short by approximately $3 million to fully finance Good Will Hunting. And doing so would completely drain his bank account, leaving him without a single dollar for contingencies. It would be an extremely risky move.
Naturally, there were still future revenue streams from Paranormal Activity: Blu-ray/DVD, digital sales and rentals (TVOD), and the eventual SVOD license.
A24 had already informed him that they plan to release the Home Entertainment material within the next 30 days, which means that Paranormal Activity would only become available in physical format in January, followed by the digital release and, later on, the sale of streaming rights.
That entire cycle could generate between $5 and $8 million in additional revenue, but that money would take time to arrive, most likely over the next six months. Owen doesn't want to wait that long.
So, faced with this situation, he has three options.
The first: film Lights Out. He already has the feature-length script finished. Although he hasn't seriously begun pre-production yet and still doesn't have an official budget, in his past life the film cost $4.9 million. He could easily finance it with his $9 million.
The downside: he is not the protagonist. The story revolves around Rebecca, a twenty-year-old woman who investigates the connection between the evil entity and her mother.
Could he give himself an important role? Yes.
There is Brett, Rebecca's boyfriend, a strong secondary character, present in multiple dangerous scenes, who accompanies her until the end and survives. Unlike Drake in Paranormal Activity, Brett does not die at the end.
But investing $4.9 million or more to produce an entire film, lead a full project, and not play the lead role is something Owen simply does not want.
He is risking his own money, his personal wealth, so he wants to be the protagonist of the story he finances. For that reason, this option is ruled out. What truly matters is still finding a way to finance Good Will Hunting.
The second option was to seek investors. Not to cover 100%, he can finance more than 70% himself, but to make up the missing $3 million. And after his interview on The Tonight Show, securing that financial support is almost trivial.
The interview had been a success, and when Jimmy asked him why he was spending so much money on film equipment, Owen mentioned that he had indeed purchased that expensive gear for his next feature film, confirming the suspicions and rumors sparked by his vlog days earlier. By confirming all of this, half of Hollywood began paying far more attention to him than before.
With this level of visibility, it would be enough to show the script and present the current state of pre-production to secure the remaining $3 million. He had already received calls asking about the project, A24 being one of them.
But he didn't want to do it. Owen wanted to retain 100% creative control. He already had to share part of the backend revenue with the distributor and the theaters, if he were to bring in investors or outside studios as well, his percentage would be reduced, and, worse for him, so would his decision-making power.
So even though securing financing would have been easy, it wasn't the right option. Option discarded.
The third option, and the one Owen had already decided on some time ago, was to sell the IP of Paranormal Activity.
The process began on October 24, when the film had officially become the highest-ROI movie in history and was less than eight million away from crossing the hundred-million mark. Within a week it surpassed one hundred million, confirming that the IP held enormous value.
Owen didn't do this alone. Valuing intellectual property was not his specialty, and his time during that period was stretched to the limit: he was shooting The Spectacular Now while also handling nighttime pre-production for Good Will Hunting.
Balancing all of that was difficult enough on its own. So he asked for help from two people he trusted completely: his father and his brother.
His father has over twenty years of financial experience. His brother works as a lawyer at a top-tier firm, specializing in litigation, intellectual property, and contracts.
It was the perfect team for this kind of task.
With the box office data they already had and the growth projections, they began a formal investigation to determine the value of the IP. That process lasted until November 3, during which they evaluated: the current value of the brand, sequel potential, market comparisons with similar IPs, and historical sales of horror franchises.
In the end, they prepared a professional document: the IP Valuation Report.
It then took them about five days to assemble a legal and financial summary outlining the franchise's potential, growth metrics, and a suggested price range to present to buyers.
However, they had to update that report several times, Paranormal Activity kept climbing at the box office day after day. Only now, after the film had officially left theaters, were they able to finalize a definitive document.
And the price was insane.
When Owen first considered selling the IP, he imagined a few million, maybe somewhere between $5 and $10 million. He didn't have an exact figure in mind, but he never imagined a number this high.
The final valuation range came in between $25 and $55 million, considering that the film had already reached $143 million in box office revenue.
That high valuation was due to several factors:
-It's found-footage horror, an extremely low-cost format.
-The return is exceptionally high.
-A sequel could cost $5 million or even less.
-With the brand already established, a sequel grossing $100 million or more is entirely plausible. Even if it only made $50 million, it would still be a solid business.
-And whoever buys the IP isn't doing so for just one movie, they're thinking in terms of three, four, five, or even six installments, or until the franchise stops being profitable.
Studios, in general, pay between 5% and 15% of the projected franchise value to acquire an IP of this kind.
Owen contributed everything he could to the process, but the main credit belonged to his father and his brother. For that very reason, he already intended to compensate them fairly for their work, even above market value. After a sale like this, being stingy would feel wrong.
A few days earlier, on December 1, they officially began contacting potential buyers.
The first to respond was A24. That made sense: Owen had a direct, trust-based relationship with them, and they were the first ones he offered the IP to. But the owners' response was immediate and clear: they declined.
A24 was not known for making sequels, though it's not that they were opposed to them, and they did have a few here and there. Still, they knew the price would be far higher than what they were willing to pay, especially given the level of competition that would emerge.
Even so, this didn't discourage Owen. He had a contact at Blumhouse. In the past, they had reached out to him wanting to buy Paranormal Activity. He had met with them at their offices, and they had even offered him a deal that would allow him to keep a percentage of the box office and partial ownership of the IP.
Because of that, sending them the offer now was simple. He received a response in just 48 hours.
And it was a positive one. They confirmed that they were interested and wanted to move forward. The first meeting was scheduled for the very next day: Thursday, December 8.
But they weren't the only ones.
Owen also presented the offer to Lionsgate, a studio he had already worked with thanks to The Hunger Games. And they, too, responded favorably. The meeting with Lionsgate was set for Friday, December 9.
It was clear that both studios were interested, and that interest didn't come from a simple email saying, "Hi, I'm Owen Ashford. Are you interested in buying the IP for Paranormal Activity, yes or no?"
No. It wasn't that simple.
Each studio received a complete professional package: IP valuation, financial projections, franchise potential, market comparisons, and a suggested price.
And even so, both responded positively, eager to meet as soon as possible. Clearly, the chances of reaching an agreement were very high.
Best of all, closing a sale like this is much faster than waiting for the future revenues of Paranormal Activity 1: Blu-ray, DVD, TVOD, and so on.
If everything continued at the current pace, Owen could receive the money from the IP sale within the same month. Moreover, selling the IP does not affect in any way the agreements, payments, or percentages related to Paranormal Activity 1.
Everything the first film generates, now or in the future, remains untouched.
The buyer has no right to claim anything from it, because the licenses have already been signed, A24 holds perpetual distribution rights, and Owen contractually retains his 20% participation.
In short, everything Paranormal Activity 1 produces will continue to belong to A24 and Owen.
What he is selling to the buyer are the rights to produce the future: sequels, spin-offs, series, or any derivative content they wish to develop from Paranormal Activity 2 onward.
That same day, around four in the afternoon, Owen walked to his parents' house. He lived nearby, and enjoying a few minutes of fresh air always did him good, it helped him hit his daily step count and get his body moving after so many hours sitting down.
His father and brother were waiting for him there. Both had left work a bit early, with the senior positions they held and the extra hours they often took by choice rather than necessity, they never had trouble adjusting their schedules when something important came up.
The three of them headed to Edward's spacious study. It was a large room, with shelves packed full of books on economics, law, history, and management.
Books that Owen would most likely find tedious.
A large dark-wood table occupied the center of the room, accompanied by three padded chairs, it wasn't the first time they had worked here together. On one of the walls, a whiteboard displayed calculations, percentages, and diagrams that Edward had been refining for days.
James loosened his tie slightly as soon as he walked in.
He was taller than Owen, his blond hair perfectly combed, and his expression serious. His disciplined nature, so often teased by Sarah, fit his profession perfectly. Still, with family, he revealed a warmth that almost no one else ever saw. Especially with his wife, and when he teased Sarah, a pastime he shared with Owen.
"Ready for long hours of planning?" James asked with a sigh, though he looked genuinely energized beneath it.
He was used to this kind of planning, multi-million-dollar negotiations, but having it be this close, involving his younger brother, made it more personal.
Edward nodded. His more than twenty years of experience in corporate finance made him the technical backbone of the entire process. James, for his part, had helped with everything up to this point, but his true value would come tomorrow, during the negotiation: contract reading, legal adjustments, pressure tactics, and strategy. That was where he shined.
"Ready," Owen said as he took a seat, setting a notebook and a pen on the table.
He was aware that, among the three of them, he understood the least about the deeper financial aspects and had contributed the least to the technical side of the process. It wasn't that he didn't understand anything, he followed everything perfectly. And he had learned a great deal as a producer: budgets, expenses, returns, percentages. But this was something entirely different.
James looked at him for a moment, raising an eyebrow. "I'm impressed by how calm you are," he remarked. "You're about to close a deal that could exceed twenty-five million dollars, and you're acting like this is just another meeting."
Even for James and Edward, who earned very good money, twenty-five million dollars was an enormous sum, greater than the combined net worth of either of them. Seeing Owen on the verge of receiving that amount, and that without even counting what he had already earned from box office profits, felt almost surreal.
Owen gave a small smile. "I am nervous. It's just that… I feel like we're well prepared."
'You don't look it…' James thought. But then again, his brother had always been casual about money. Big numbers had never really fazed him, nor had asking for money when needed.
Edward took a seat beside them and laid out several folders filled with meticulously organized documents.
"We are," Edward said calmly. Then he looked at his youngest son. "But tell me something, don't you feel even a little sad about selling your first movie?"
Edward wasn't exactly a sentimental man. He wasn't cold, but he was reserved. With family, especially Elizabeth and Sarah, his armor softened, but in general he was practical, logical, and direct.
Even so, he knew perfectly well what Paranormal Activity represented: Owen's first film, the one that launched him to fame, the one that broke the record for highest ROI in history, the one that allowed him to meet his girlfriend and the man who was now his best friend and director. In a way, it was the beginning of everything. Selling it was no small decision.
Owen shrugged. "Not really. Why would I keep it when I can get an enormous financial return? If studios want to buy it, I should take advantage now while the IP is hot. And if they want to squeeze it for every last cent… let them."
That was Hollywood when it came to franchises and sequels.
And in the horror genre, even more so. Many films were designed as one-offs, but once they became successful, studios would start releasing sequel after sequel, even when the quality dropped, just to milk the franchise to its limit.
Owen could write the scripts for Paranormal Activity 2, 3, 4…
Each would probably gross over a hundred million dollars. But he wasn't interested. They weren't scripts he liked, they didn't challenge him, and they offered him nothing creatively.
He had too many scripts in his head, stories he genuinely considered valuable, deep, and interesting. He preferred to dedicate his time and career to projects that truly mattered to him, that excited him, that allowed him to act, grow, and experiment as a creator.
Empty sequels could be left to those who wanted to produce them. He had other goals.
Edward nodded as he took in his son's expression.
"Well," James said as he adjusted himself in his chair, "let's begin."
The three of them plunged fully into the planning, mapping out every possible scenario to ensure that the meeting the following day would be a success.
And just like that, that day arrived.
-------------------------------------------------
You can read 15 chapters in advance on my patreon.
Link: https://[email protected]/Nathe07