EXCLUSIVE: After his trio of Saw movies took in over $450 million worldwide, director Darren Lynn Bousman built a nice business for his campy horror offerings by hacking out wide release theaters from a business game plan that hearkens back to Rocky Horror Picture Show. He’s now set his cast and started production on The Devil’s Carnival: Alleluia, the second film to be made using a formula honed from the failure of his 2008 film Repo! The Genetic Opera. “I got frustrated, feeling my films could find an audience, but you’re either got to be a tent pole or you’re relegated to a one or two-screen art house release. I think there’s something in between.” That something turns out to be the rabid midnight audience that has made Rocky Horror one of the most profitable films of all time.

Devil's Carnival 2 AlleluiaFor The Devil’s Carnival: Alleluia, Bousman has just set Rocky Horror‘s Barry Bostwick, Jesus Christ Superstar himself Ted Neeley, Rent‘s Adam Pascal, and Baywatch‘s David Hasselhoff to star alongside returnees Paul Sorvino, Terrance Zdunich, rapper Tech N9ne, Emilie Autumn, Briana Evigan (Step Up All In), Marc Senter, and Dayton Callie (Sons of Anarchy). Parenthood‘s Lyndon Smith, Kristina Klebe, and musicians Chantal Claret, Jimmy Urine, Shawn “Clown” Crahan of Slipknot, and Kevin “Ogre” Ogilvie from Skinny Puppy round out the ensemble of carnies and lost souls whose paths cross at a theme park. Alleluia continues the saga and sees the forces of Heaven and Hell face off in a showdown. Zdunich wrote the script and co-wrote the musical numbers with Saar Hendelman. Producers are Chris M. Bonifay and Sean E. Demott. Brian Perera is executive producer.

“As filmmakers we have to change with the times,” said Bousman. “It’s hard to get financed, and harder to get released.” With Zdunich, Bonifay, and Demott, he sold his cast on the idea they were making the “anti-Glee” with an unconventional DIY business model. The $500,000 budget horror musical will be taken on the road across the U.S. and Europe, replicating the macabre traveling circus tour and fan-targeted release strategy that saw the hour-long Devil’s Carnival end in the black. Filmmakers won’t disclose the theatrical gross or budget of the first film, but say they recouped their entire production budget in a few weeks through direct-to-fan home video sales of a 6,666-unit limited edition DVD/Blu-ray. “We had talks with VOD companies and their projections over four years were less than we ended up making in the first three months,” said Zdunich. “We cut out the middle man and went right to the fan base.”

Devil's Carnival Darren BousmanOn their first tour the filmmakers four-walled theaters in 80 cities and complemented the program with local sideshow acts, entertainment and cast Q&As. They often sold out houses at $30-$50 per ticket and then made deals with Netflix and iTunes, and sold limited edition DVDs partnered with Hot Topic. Still, the short length hurt. On the Devil’s Carnival 2, Bousman and cohorts have modified the formula with a more traditional running time to better exploit digital distribution and foreign sales. Their roadshow will now cross the pond with a European tour. They also plan a digital soundtrack release through Amazon and iTunes and physical soundtrack releases in partnership with goth/industrial record label and financier Cleopatra Records.

It’s a model Bousman stumbled upon by accident during the failure of his first cult musical Repo! The Genetic Opera. Lionsgate, which released the Saw films, didn’t know what do with the fringe subject matter. Released it in a handful of cities with little promotion, the film left theaters after a month grossing just $188,126 in worldwide box office – but not before Bousman, Zdunich & Co. packed into a van to take the film on a grassroots promotional road trip and discovered they had a rabid cult following.

The filmmakers found that Repo! fans would show up in costume to screenings, recite lines aloud, and sing along to the film. So does the Devil’s Carnival audience. Their live extravaganzas are more akin to a rock concert then a film screening, filmmakers say. At each tour stop they screen the movie and sell the experience directly to their fans, along with DVD, Blurays, soundtrack copies, and merchandise. “Our model is almost like a rock band – we tour, sell merchandise, put on our own carnival side show, and cast members come out and join us at various stops,” said Zdunich. P&A costs stay relatively low with Twitter and Facebook blasts reaching their fans directly; the film’s Facebook page has over 45,000 likes and primarily reaches a highly engaged 18-24 year old demographic.

“I did three Saw movies and never saw this type of fan interaction,” Bousman told Deadline. “We appealed to a demo and allowed them to dress up in costumes and not be judged. Every night we were on the road was a mini Comic-Con where it was okay for them to sing at the screen and have a good time.”

“People aren’t necessarily incentivized to leave the house when they can listen to music or watch a movie for free,” added Zdunich. “You’ve got to give them something they can’t get at home.”