The film is really low budget as the story happens in its entirety inside only one house in San Diego. It occurs in the course of three weeks. Katie (Katie Featherstone) and Micah (Micah Sloat) are live-in partners (they say they're "engaged to be engaged") who encounter strange experiences in their new house. This is not new to Katie. As a child, she's been haunted by an entity that caused their house to burn down. Looks like this spirit has returned now to continuing its haunting of her, so it's not really their house that is haunted but she herself.
Micah thinks it's a rare chance to investigate mysterious phenomena, so he sets up a camera on a tripod to record what's happening inside their room while they are asleep at night. The camera is fixed on its location and we cannot see anything else beyond its range. At first, it records strange sounds then shows a door closing and opening on its own. Katie consults a psychic who tells them that the entity in their house is not a ghost but a demonic thing whose target is Katie.
Micah, a real "pasaway", wants to communicate with with a ouija board but the psychic tells him that trying to contact it will only encourage it all the more and that if feeds on negative atmosphere. Soon after that, things get from bad to worse. The strange sounds get louder and louder and, at one point, a strange force drags Katie out of bed and into the other room.
Comparisons with "The Blair Witch Project" cannot avoided. The 1999 indie hit was also made on a meager budget but earned millions. Both are shot documentary found-footage style by a video camera, but this one is definitely an improvement over "Blair Witch", which is about a group that gets lost in the forest. This film is about a couple who gets trapped inside a spooked house and they can't leave as they're told it's useless since the entity will just follow them wherever they go. The video camera is used like it's a separate character in the movie.
The creepy technique used here by the director is to rely more on the viewer's imagination than in actually showing anything. As we've said, it's all the ominous anticipation and playing on our expectation and imagination for something horrifying to happen that create more tension in the viewer, building upon the horror that is only hinted at on screen. Those who want to see a lot of mainstream blood, gory special effects and monstrous creatures will be disappointed as they don't have it here. But if you'd take the style and structure seriously, debuting horror film Director Oren Peli's deceptively simple approach is really quite effective.
The ending we saw in the theaters, we learned later, is the one suggested by Steven Spielberg. Upon research, we learned that the movie has already been released on DVD and it has a totally different ending. We looked for a copy of the DVD (which can be bought on demand from a website) and some scenes are longer than the theaterical version. The endings of the two versions are also vastly different from each other. We won't go into details as it'll be a spoiler. Suffice it to say that the theatrical ending is really the more diabolically shocking, more jolting payoff, one that will leave you stunned.
