Low-budget hit based on a viral video shows why Hollywood scouts YouTube for talent, ideas

A Swedish horror short made by an unknown director spawned a US studio remake, Lights Out, and may change how Tinseltown finds new talent

PUBLISHED : Saturday, 13 August, 2016, 10:03am
UPDATED : Saturday, 13 August, 2016, 10:03am

What if Hollywood’s most profitable summer film came not from a comic book, a bestselling novel or a video game, but from a viral video on YouTube?

After the success of the tiny-budget horror film Lights Out, about a threatening creature that appears only in the dark, that scenario doesn’t seem so far-fetched.

The PG-13 film was based on a three-minute film from Sweden and made by a director no one had ever heard of. Yet the well reviewed film grossed about US$40 million in ticket sales in its first week of release in the US, roughly eight times what it cost to produce – an extraordinary return on investment. Naturally, a sequel is already in development.

Low-budget horror has long been a reliable profit centre for the film industry, with recent examples including The Purge: Election Year and The Conjuring 2 . But the success of Lights Out represents a potential watershed moment for studios looking at YouTube as a source of inexpensive, untapped talent and ideas.

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“I don’t know of any precedent that’s better than this,” says Crash producer and UCLA film professor Tom Nunan of the film’s viral origins. “Lights Out is very fresh and very original, but it’s still in a genre that people love.”

And that may be just what the film business needs as it grapples with a summer box-office season that has produced a number of high-priced flops and disappointing sequels.

YouTube has emerged as a key hunting ground for next-generation filmmakers.

“If you can get enough hits through YouTube, Hollywood will come calling,” says Jeff Bock, box-office analyst at Exhibitor Relations. “These online channels are the way that people are going to be discovered in the future.”

So far, video stars with massive followings have tried – with limited success – to transition to more traditional modes of filmmaking. YouTube itself has evolved from an outlet for home-made videos to a much bigger player in the entertainment world. The Google-owned video platform opened a 41,000-sq ft production facility in Playa Vista in 2012, and in October launched the new subscription service YouTube Red.

Major studios have been under pressure to reach younger audiences who aren’t flocking to cinemas like their parents did. They’ve attempted to leverage the popularity of YouTube’s “creator” community, to reach a fervent, digitally savvy audience. DreamWorks Animation, Lionsgate and Paramount Pictures have all invested in the growing space.

To be sure, studios have struggled to come up with the right formula for turning YouTube viral content into big-screen success. Projects like Snervous, the 2015 documentary about YouTube star Tyler Oakley, are mostly distributed online and rarely make it into cinemas.

Ironically, Lights Out didn’t come from YouTube’s deep roster of social-media gurus but from an unknown Swedish director working in his apartment with no budget. The story of David Sandberg’s discovery has parallels in the music industry, in which singer Justin Bieber was discovered via demos uploaded to YouTube. In another example, director Fede Alvarez was discovered in 2009 after he posted a short film on YouTube and ended up making the 2013 Evil Dead remake.

The unexpected journey for Lights Out is a modern, digital twist on a well-established Hollywood practice. Popular films such as Mama, Saw and even the Oscar-nominated Whiplash started life as film shorts. Now, YouTube has become a go-to place for budding filmmakers to share short movies that previously wouldn’t have had the opportunity to reach a wide audience.

“The internet has changed the game forever, and there is long-standing precedent for finding new ideas this way,” says Darin Friedman, partner at the Beverly Hills entertainment firm Management 360.

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Producer Lawrence Grey first saw the beginnings of Lights Out the day he moved into his office in 2014. He was looking for material and making phone calls, when a friend pointed him towards a short film going viral on the social-media site Reddit.

The original short had no budget or dialogue – just a woman (played by Sandberg’s wife, Lotta Losten) terrorised by a shadowy apparition. Grey watched it on his work computer with the sun coming through his office windows, not the ideal setting to watch a scary movie. Nonetheless, he says, it freaked him out.

“I went to bed that night haunted by images of that short,” Grey says.

After that, he contacted the director and they started coming up with ideas for how to expand the story.

Grey paid US$10,000 for the rights to make the feature, with the condition that Sandberg would direct the full-length version. He also got James Wan (creator of the Saw and Conjuring franchises) to sign on as a producer, giving the film name recognition and helping with casting and crew decisions.

With Wan’s endorsement, Warner Bros and its New Line Cinema unit agreed to fund the project, covering the US$5 million in production costs, plus marketing and distribution expenses. One of the selling points had been the video’s huge popularity on YouTube, where it eventually attracted 200 million views, indicating a strong built-in audience for a potential film.

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“I think there’s a great moment now where the audience is telling Hollywood, ‘Make this!’” Grey says.

New Line decided to release it in the middle of summer as a classic counterprogramming choice against Star Trek Beyond and the kids film Ice Age: Collision Course . The film opened on July 22 and made US$22 million, edging out Ice Age, which cost US$105 million to make.

“Whenever you gross more than four times the budget on opening weekend, that’s a win,” says Jeff Goldstein, head of distribution for Warner Bros.

New Line’s promotional campaign for Lights Out capitalised on the short film’s viral popularity by chasing not just die-hard horror fans, but also social-media-addicted audiences. The filmmakers and the studio spoke directly to the YouTube crowd, hosting a screening with the filmmakers at this year’s VidCon gathering of video creators in June.

Although it wasn’t directly involved in the film, YouTube took advantage of the buzz surrounding the project to promote its own efforts to support budding filmmakers. Sandberg and Losten held a career workshop for new directors at YouTube’s facilities in New York.

“It’s inspiring to see storytellers like David do great things on and off YouTube, and to see how engaged he was in helping mentor talented creators,” says Adam Relis, head of YouTube Space NY.

There’s little doubt that the online popularity of the Sandberg short boosted the film’s prospects, says UCLA’s Nunan. Still, he cautioned that it takes more than a YouTube sensation to make a profitable franchise.

“It certainly helped, but it wasn’t the complete secret sauce,” Nunan says. “There were a lot of things working in its favour.”

And it remains to be seen whether studios can repeat the success of Lights Out, or if it was a one-off success.

Grey, though, has no doubts that studios and production companies will increasingly turn to YouTube for source material.

“Where would I have had access to David but through YouTube?” he says. “I bet there will be a whole bunch of short films that get bought and adapted in the hopes of finding the next David Sandberg. My hope is, it’s a model in that the institutional players see it and say, ‘You never really know where the next big thing is going to come from.’”

Lights Out opens on August 18