It’s a move that promises to shake up the world of horror movies and leave all others in vampire dust.

James Wan and Jason Blum are working out the details during advanced talks to create one big horror factory as the genre becomes Hollywood’s hottest commodity. If a deal is closed, which could be in early 2023, Wan’s Atomic Monster and Blumhouse would operate as separate labels with their own creative autonomy. And Wan’s label would move its first-look deal from Warner Bros. to Universal, the home of Blumhouse.

The new entity would be a threeway ownership split, with stakes by Blum, who will remain the majority owner, Wan and NBCUniversal parent Comcast. “We don’t usually put out more than three or four theatricals a year, and my hope is that with James we could double that to six to eight theatricals,” Blum tells The Hollywood Reporter.

One of the long-term goals for Blum and Wan is to create an enviable company that would be sold down the road. But, more immediately, a merged firm would be able to scale up horror output dramatically with a filmmaker (Wan) who creates scary original franchises and a producer (Blum) who cranks out franchises for theatrical and streaming.

“This is a seismic shift for the horror genre,” says one filmmaker who has worked with both Wan and Blum. “This elevates horror and the industry will be taking it more seriously for sure.”

Horror has not only gone mainstream but is now one of maybe two genres — aside from comics — that consistently works for theatrical releases, especially this year.

Paramount’s Smile, released Sept. 30, has made over $210 million worldwide ($100 million domestically) and is the No. 1 original and No. 1 horror title of the year. Not bad for a movie that cost around $17 million. Blum’s The Black Phone was a critical and slow-burning box office hit, making almost $160 million worldwide on a budget of $18 million. A24’s one-two punch from director Ti West, X and Pearl, also won over critics and moviegoers.

And it’s a genre that other studios that are not Disney/Marvel Studios and Warner Bros./DC Studios, who basically have a monopoly on superheroes, can delve into.

“Horror is the best thing to have if you can’t do comic book movies,” Blum added.

News of the merger came on the heels of Paramount’s own horror gamesmanship. The studio hired Walter Hamada, fresh off his stint as head of DC films at Warners, to oversee its own horror line, one it hopes to expand in the aftermath of Smile’s success.

While Blumhouse/Atomic Monster may take on a volume approach, Hamada is being seen as taking a more curated approach, say people who have worked with the filmmakers. “[Walter] only develops what he makes,” says one.

But while Universal and Paramount grow strong in the scare business, Warners is looking a white shade of pale. Atomic Monster previously had a deal at Warners, where Wan is in postproduction on Aquaman and the Lost Kingdom and where his Conjuring movies and spinoffs alone have generated more than $2 billion in box office revenue. His deal ran out in the spring and the studio made no overtures to keep him.

Hamada was a horror exec at Warner’s New Line division where he and Wan first launched Conjuring before the exec moved to DC movies. He, too, was happy to move on and wasn’t approached about a studio deal which is normally customary for longtime execs. “Warners used to be the first place to [take] horror because of New Line,” notes one filmmaker. “Losing these guys shows it doesn’t know the value of the talent they have.”

Kirsten Chuba contributed reporting.

A version of this story first appeared in the Nov. 21 issue of The Hollywood Reporter magazine. Click here to subscribe.