However, direct-to-DVD sales of horror films rose by more than 38 percent last year and have soared by nearly 50 percent so far in 2008 when compared with the same period a year ago. New York-based Nielsen VideoScan does not release sales numbers, but industry sources believe that the direct-to-DVD horror genre generated more than $140 million last year.

Internet marketing

Raw Feed's distributor, Warner Bros. Home Video, has played a significant role in the company's success. Warner spends less than $2 million to market Raw Feed films, focusing mostly on Internet marketing campaigns targeting horror fans.

"Raw's films have performed extremely well," said Jeff Baker, a Warner Bros. senior vice president and general manager.

Krantz said that the company is ready to do more than just frighten and horrify people. Raw Feed is creating several new labels in order to make future films in other genres such as martial arts, teen comedy and animation. The partners are even in talks now to produce an Imax film for NASCAR.

Raw Feed has a slate of at least six of its horror-thriller films ready for production over the next two years.

One critic isn't particularly thrilled by the prospect.

"I applaud them for their high level of production value and for trying to come up with better scripts, but they just seemed to miss the mark," said Anthony Timpone, editor of Fangoria magazine, a publication specializing in the genre. He doesn't feel the mix of comedy and horror really gel.

Timpone points to theatrical releases such as "Saw," "Hostel" and "30 Days of Night" as examples of top-shelf horror-thriller films.

Timpone said DVD movies can be produced on the cheap and still attract a big audience at the stores. "When you're in the store looking for a certain type of movie, you can have a $100 million film sitting on the shelf right next to a $2 million one; and if the cover art is good, the average consumer really doesn't know the difference."

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