How Paranormal Activity became a frightening success

21 Nov 2009: Social networking sends $15,000 shocker inspired by Fawlty Towers into box-office hall of fame

There is nothing remotely scary about the beige library in the Soho Hotel. It’s calm, quiet, bland. Yet towards the end of a low-key interview with Oren Peli, who’s in London for less than 24 hours to promote his smash-hit low-budget horror flick Paranormal Activity, there’s a loud creak in the corner of the room and I find myself leaping out of the armchair. Peli sits deep in the sofa. He doesn’t move. I think I’ve been hearing things. Peli simply smiles. He nods; he heard it too.

Weeks after watching Paranormal Activity it’s easy to be spooked by every creak, even in the middle of the day. Filmed over seven days and nights in Peli’s suburban San Diego house in 2006, Paranormal Activity is a mock documentary in the style of The Blair Witch Project; we watch a young couple set up a video camera in an attempt to discover what exactly is going bump in the night. Doors crash closed, the bed sheets billow, prints are found in the white powder scattered on the polished floor. There is no monster, virtually no blood. There are tantalisingly long moments of silence and static shots are preferred to the usual jerky, handheld frenzy of DIY horror movies. The film looks, sounds and feels very homemade. Yet it’s scary as hell.

‘There were strange noises at night that made us both jumpy. You know, stuff falling off shelves …’

Paranormal Activity was made for just $15,000 (it’s been reported elsewhere as $10,000 but he reveals, “The overall budget was closer to $15k”). Incredibly, the film’s takings have now passed the $100m mark in America. Fans speak proudly of not being able to sleep for a week after seeing it. Some go back for more just to see if they can handle freaking themselves out all over again. Peli looks serious when he says that if Jaws stopped people swimming in the sea and Blair Witch stopped people camping in the woods, then he is pleased that Paranormal Activity is stopping us from sleeping. He shrugs: “It means it’s been effective.”

Peli – 39, black shirt, black jeans, black trainers, ultra-white socks – looks dazed and distracted. He glugs Coke from a glass bottle and constantly checks the messages streaming into his BlackBerry. He doesn’t appear to be thriving on his success; he certainly doesn’t look like the writer, director, producer and editor of the most successful budget horror since Blair Witch, which was filmed for $35,000 and made close to $250m. Born in Israel, he moved to America at 19 and became a full-time software designer. Until, that is, his then-girlfriend started to hear strange things in their new San Diego home. “Actually there were strange noises at night that made us both jumpy. You know, stuff falling off shelves …”

He thought of setting up a video camera in their bedroom, didn’t get round to it, and turned the idea into a film. “After seeing Blair Witch and Open Water, I realised that anyone can buy a video camera and start shooting a movie. I thought the basic concept of setting a video camera up at night when you’re asleep and vulnerable was pretty scary because it plays on people’s primal fear.” So he bought a camera for $3,000 and auditioned for two naturalistic actors: first-timers Katie Featherston and Micah Sloat got the job because of their authentic response to Peli’s opening question: “How do you think your house is haunted?”

‘After The Exorcist I couldn’t watch any movie that had anything to do with a haunting or a ghost … even Ghostbusters’

Peli wasn’t interested in emulating the “torture porn” of the Saw series. He didn’t want blood and gore. He wanted to hint at an invisible but malevolent presence and let the audience’s imagination fill in the blanks. He namechecks The Sixth Sense, The Others, Steven Spielberg’s 1971 television film Duel and Rosemary’s Baby. He then visibly shudders and tugs at his white socks at the mention of The Exorcist. “I saw it when I was 11. It totally freaked me out. After that I couldn’t watch any movie that had anything to do with a haunting or a ghost. I was in my mid-teens when Ghostbusters came out and although I knew it was a comedy, I couldn’t handle the idea of it. I didn’t see another horror film until I was well into my 20s.”

As part of his pre-production research, Peli watched horror films – but still not The Exorcist – and endless DVD extras. He talks of being inspired, bizarrely, by Fawlty Towers. “It’s one of my all-time favourite TV shows. John Cleese deconstructs the dynamic of Basil and Sybil’s relationship, explaining how they have the freedom to say what they like to one another because they’ve been together for so long. I told Katie and Micah to do the same; usually at the centre of a movie there’s a fairytale love story or the emotional drama of a break-up, but I wanted Paranormal Activity to show a realistic relationship put under pressure by freaky things going on in the house.”

After an exhausting week-long shoot, Peli spent a year editing the film on his PC. He added the CGI and did the audio mixing. Every few months he’d invite friends and neighbours over for a viewing and respond to their feedback. He was still editing in autumn 2007 when the film was accepted at Screamfest, the small Los Angeles festival for homemade horror. Audience members covered their eyes, cuddled each other, screamed and howled. Peli was relieved.

People started blogging about Paranormal Activity but it didn’t have a distributor. Then, over the course of the next 18 months, several things happened to propel the film into the stratosphere. Peli met Jason Blum, a producer who had passed on Blair Witch ten years ago, and Blum got a copy of it to Steven Spielberg. In what is fast becoming either an urban myth, a smart piece of marketing or a scary true story, Spielberg was not only disturbed by the film but also petrified to find a door in his house inexplicably locked from the inside. The DVD was promptly taken away in a bag and Spielberg became one of the film’s biggest advocators.

Yet it is Paramount Pictures’ online marketing department who’ve galvanised the grass-roots frenzy around the film in America. In a move inspired by the web-based marketing that helped Blair Witch become a hit, they gave Paranormal Activity fans the unique opportunity to bring the film to their local cinema by clicking a “Demand It” button both on Facebook and on the film’s own website. A “Tweet your scream” campaign was launched. Unsettling footage of fans screaming at a Paranormal Activity screening is all over the internet. After just five weekends in America, the film is now the top-grossing R-rated thriller of the decade.

Is Peli concerned that the marketing of Paranormal Activity might become more important than the film itself? “The two are interlinked,” he says, with another shrug. “The marketing automatically relied on the fact that people would see the movie, enjoy it and tell their friends. Without word of mouth the film would have done nothing.”

He dismisses the potential harm of hype and says he’d always go and watch a movie with an interesting story attached to it “just out of curiosity”.

The co-writers/directors of Blair Witch have yet to repeat their success of a decade ago. What of Peli? Did he just have one good, simple idea? He is cagey about his next project, Area 51, allegedly filming in Utah with a budget of $5m: “Sorry, I don’t like to talk about any future projects.”

He swigs his Coke and stifles a yawn: “As soon as I get the chance, I want to take a long, long vacation.” For now, however, his life is taken up with promoting Paranormal Activity around the world and finding out just how many people can no longer sleep at night.