7 Questions About 'Paranormal Activity'

Paranormal Activity, a low-budget horror movie about a California couple haunted by a demon, has become Hollywood's biggest success story since The Blair Witch Project. The movie was made for $15,000 by Oren Peli, a videogame programmer with no directing experience, who shot the film in seven days at his house in San Diego. After Paranormal started winning kudos on the film-festival circuit, an executive at DreamWorks showed it to Steven Spielberg, who acquired it and later handed it off to Paramount. By last weekend, the film had expanded to 760 theaters, and by Tuesday, it had raked in $36.9 million, thanks to an aggressive marketing campaign based on Twitter and Internet word of mouth (check out the New York Times story here). (Article continued below...)

This is all encouraging, because it blasts open Hollywood's doors to the rest of us—thanks to reality TV, anybody can be famous now, and thanks to digital technology, it's beginning to look like anybody can make a movie, too. Peli's story might be unconventional, but his plot isn't. It focuses on a woman named Katie (Katie Featherston), who thinks she's being visited by a demon in the night. Her boyfriend, Micah (Micah Sloat), buys a video camera to film the house while they are asleep, and the whole movie is conveniently shot as a shaky amateur video. Peli spoke to NEWSWEEK's Ramin Setoodeh and shared his secrets for how he made Paranormal Activity.

1. Where did he get the idea to make a movie?
He says the premise came to him after hearing strange noises in his own house. "I don't think it was anything supernatural," he says. "A lot of it was natural stuff like the house settling, but that's what got me thinking: what goes on when you're asleep? I've always loved movies. I loved to watch them. Movies like The Blair Witch Project showed me if you get a video camera, with a very small budget, you could make something happen."

2. What did he spend his $15,000 budget on?
"A lot of it was equipment," he says, including the camera, the tapes, the batteries, and the editing software. "All that was more than half the budget."

3. Why did he film in his house?
"Why not? It seems so much simpler," he says. It even gave him an excuse to do some renovations. "When I got the camera, I started shooting around in test shots, and it didn't look very cinematic," he says. "I did some home improvements and put in hardwood floors, painted, and added furniture to make things look better."

4. How did he edit the film?
Peli says he taught himself editing on the Internet. "Before I shot the movie, I spent a year training myself to edit the CGI and audio mix," he says. "I needed to know what my abilities are: what I can and cannot do, and plan the movie around it. Then I bought an editing program and started experimenting."

5. Why did the ending change?
In the original version, the police storm into the house and shoot Katie after she's been possessed. "It was slower," he says. "It didn't have much of a payoff. It tested OK, but not great." The current ending, which has audiences screaming and clutching their seats, was suggested by Spielberg.

6. Is he worried about Blair Witch-like backlash ?
Nobody has heard from Blair Witch directors Daniel Myrick and Eduardo Sánchez in years, and it's not because they got lost in the woods. "There are always going to be people who are not going to love the movie, whether there's hype or not," Peli says. "A lot of people are still blogging and Twittering: believe the hype."

7. Is he going to quit his day job?
The short answer is yes—Peli is a full-time director now, and a rep from Paramount said that he's working on his next project. But he's learned a valuable Hollywood lesson: sometimes you get more attention if you keep everything a secret, even if there's nothing to hide. "I'm not going to say anything about [the next project]," he says. When does it come out? "I don't know." Will Spielberg be involved? "I can't comment."