Paranormal, made for $15,000, has grossed more than $107 million in its domestic release. It has added a further $34 million as it rolls out internationally.
A current Paramount executive will run the business, says The Los Angeles Times. Funds for the movies will be part of Paramount's existing production budget. The division does not plan to acquire completed movies at film festivals and markets.
The division's output will not necessarily be destined for theatrical release. Instead, the LAT says, the division will operate much like a studio's development slate, where screenplays are purchased, rewritten and (in some cases) turned into movies. The micro-budget projects could also conceivably be remade with conventional budgets, Variety notes.
The studio plans to target both established filmmakers and newcomers with its micro-budget pitch.
People familiar with the studio's plans say some of the movies may end up serving as "calling cards" -- a showcase of a novice director's storytelling talent for a future project.