It was all that Elvin Feltner needed to hear. Walt Disney Pictures was beginning to expand beyond the G rating of family films and into the spicier PG and PG-13 ratings, in which language is more colorful and hemlines begin to go up -- way up. "It seems to me that people don't want to see G-rated films," says Gary Barton, vice-president of motion picture productions at Disney.

Poor Walt would turn over in his grave, answers Feltner. "He'd have closed the company down before he'd have made a PG film." Feltner, founder of Krypton Corp., headquartered in Palm Beach, Fla., is grabbing the niche vacated by Disney. "The market I'm going after is the one with the least competition," he says. Carnival Magic, his first film, opened last year to lukewarm reviews. Now he is at work on a "beach-party picture," which he is targeting at college students. For a contemporary movie producer, he has an odd way of describing his work. "It'll be a nice, clean, innocuous film," he says.

Innocuous? Feltner really believes college students will line up to see beach bunnies roast weenies and play volleyball. "I think college kids have changed -- they're not burning down ROTC dormitories anymore," he says optimistically.

Feltner plans 14 films four next year, all low-budget flicks in the $1-million range. He estimates that box-office receipts and ancillary markets, such as cable television, will return four times his budget on each movie. "I've spoken to every single movie theater chain, and they've all said they'll make one screen of each complex available to us for family films," he says.

The owner of the largest independent film library in the world, Feltner knows a lot about the ancillary markets. He leases his 4,000 movies -- all of which are either G- or PG-rated -- to television stations and cable systems here and overseas. "I've been buying up rights to films for 22 years," he says. Now he has found a new way to add to his collection -- by making the movies himself.