I guess it's the way that this looks, but you'd be forgiven for thinking this is going to be another Gremlins or Critters. A creature feature right? Puppet mayhem and all that good stuff. But the title monsters are only a weird tangent in all this, a story which is in fact about demonic rituals and evil powers being drawn from the netherworld. The little guys are always around whether it's the opening ceremony or the third act where things get out of hand. But there are so many other pieces that make them feel strangely superfluous. It's a weird mesh of ideas that doesn't really fit together in a lot of places, and worst of all you get the impressive that the rubbery menace could be excised, and it would have no impact on the narrative.
As the movie opens we're treated to some kind of weird satanic sacrifice where a cult leader wants to attain power through the death of an innocent, his own son. The child's mother intervenes at the last minute using a magic pendant of some kind, and is murdered in the boy's place. He's taken away by one of the other worshippers and is apparently never searched for - in the next scene it's years later and Jonathan has inherited the creepy house this all happened in. The guy that saved him (Jack Nance from Eraserhead) doesn't seem that worried about this fact and just vanishes for most of the movie, only bothering to show his face after all hell has broken loose.
Soon he's invited all his friends over and decides to try and impress them at a party by reading out a few lines from the strange books that are all over the place, drawing chalk symbols on the floor to summon a spirit. Of course this fails until they've all left the room to carry on their drunken antics. But why are these evil tomes still in this place? Wouldn't Jonathan's guardian want them out before letting him live her alone? He didn't even bother trying to hide his dad's pentagram emblazoned grave stone from the front lawn. All this stuff starts to become an obsession, leading to bad wizard robes, evil contact lenses and the appearance of those title characters.
However the ghoulies thing is still secondary - he even summons other minions during the whole quest for forbidden knowledge. Ones that actually talk and give advice that he can use. It's kind of strange, there are so many other elements included that the real focus is always unclear. There are random scenes that mimic Poltergeist (apparently John or his dad just happened to have a creepy doll in the place) as well as a lot of stuff that is just basically 80s teen comic relief. The hero spends most of the story being a jerk and trying to trick his buddies into becoming unwitting pawns in his occult plan. Why not have him do this all by accident and leave the guy some likeability before his father revives? He was still being used the whole time but it seems like a missed opportunity. Films from Empire Pictures are often a mixed bag, but with the potential here they should have done much better. Overall some parts are fun... but most of it's just a mess.