One advantage of horror in general is that, as long you provide the scares, the audience is very open to you being wildly experimental, or trying stuff that doesn't work out that well, in other areas.
For instance, it's the rare romantic comedy that can go with the unhappy ending. But horror films routinely have the hero end up dead, insane, trapped in purgatory, or turned into the monster at the end. And, just as often, the hero survives (perhaps only to be further tormented in a sequel).
David Cronenberg has been highly experimental with his horror stuff. It's okay to be surreal, as long as you're being scary.
You can even break $100 million with a horror film that has no plot.
One of the production advantages of horror films is that they don't need stars. For studio based films this means you score bargain prices on attractive young TV talent that's trying to break onto the big screen.
For smaller, pure independent movies, this means you can get talented, but not famous or stunningly attractive, actors. These people are often quite good, and apparently willing to work for exposure.
For example, I was impressed with the performances of the actors in the $2,000 production, Red Cockroaches. What's 2k nowadays? The price of an undergrad quarter at UCLA? Very interesting visual style in that film as well, though the director, Miguel Coyula, might be overstylizing it, whch could hurt the DVD as a calling card for getting other work.
I also rented The Off Season recently. The story meanders pretty hard in this one but there's a few nicely done dramatic scenes and I liked a lot of the performances. I'm not sure about the budget but undoubtedly low. The interesting point about this feature was that about half-way through the movie we switch main characters. We go from the PoV of the guy, to the PoV of his girlfriend. Normally, this isn't such a good idea, and in this film I suspect it might be more an accident of changing the story during production or editing, but I still enjoyed it. This could not happen in even a low budget studio film, like Cabin Fever, because in those films we've got our star, the audience knows who the star is, and that star is damn well going to give the producers (and audience) their money's worth. In the micro-budget film these are all a bunch of people you've never heard of, so you can experiment in ways that won't be available in bigger movies.
One other fun bit about the tiny films is trying to figure out who might go on to bigger success. Someone originally saw Following and Public Access and figured there was something there worth gambling a lot more money on -- and they were right.
While I think the visual style of Red Cockroaches was a bit too experimental (like trying out every possible camera angle) I do think Miguel Coyula has definite potential and could mature into a major film-maker.
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