Paranormal Activity is a little film that was reportedly made for $11,000 over the course of a seven-day shoot by writer/director/producer/editor Oren Peli, and stars newbies Katie Featherston, Micah Sloat and the couple’s camcorder.
The ghost story is pretty straightforward: Katie and Micah (the actors use their real names in the film) are a young couple who have been together for about a year or two and have recently taken the plunge of moving in together. Soon after, they begin to experience weird paranormal activity taking place in their home – lights and sinks turning on and off, doors slamming, etc. Katie soon reveals that this isn’t the first time she’s been “haunted by ghosts” – when she was 8, she had re-occurring visits from a shadowy apparition and her family’s home was eventually burned to the ground without explanation. Since then, the apparition has followed Katie wherever she goes, “visiting” her from time to time, up to the present. Micah wishes that Katie had told him all this BEFORE they moved in together.

Katie is freaking out about the reappearance of her ghostly stalker, but Micah (of course) is too MANLY to believe in such nonsense, so he invests in a top-grade camera, some top-grade mini microphones and sound recording software, in order to wire the house for a ghost-hunting experiment. Our POV is that of the camcorder and boom mic, as they record the paranormal happenings taking place in Katie and Micha’s home over the course of about three weeks.
That’s the setup, and it would be hard to go much deeper without dropping some major SPOILERS.
I can tell you that Katie and Micah bring in a psychic (Michael Bayouth) who determines that what they’re facing isn’t a ghost trying to establish communication, but rather a malevolent demon, hell bent (pun intended) on claiming Katie’s soul. The psychic tells Katie and Micah that they need to bring in a “demonologist” to help exorcise the evil spirit – only the guy is currently vacation, so they’ll have to wait it out. In the meantime, the psychic breaks down a few demon rules for the couple (and us) to understand:

1. There is no running from it – leave the house and the spirit will only follow.
2. The spirit feeds off negative energy (anger, fear, etc).
3. Don’t do ANYTHING to enrage or attract the demon – especially buying a Ouija Board.

Of course, if you’ve ever seen a horror movie before you know that the rules are only there to be broken by doomed fools. Katie is all nervousness and pragmatism (“Honey, let’s just stop and ask for directions…”), but Micah, the skeptic, would rather “man-up” and handle things his own way (read: pacing the house, challenging the evil spirit to show itself). Smart idea.
The best horror movies are the ones that exploit our deep-seated anxieties about real-life events or situations. The Exorcist was every parent’s worst nightmare: their innocent child suffering a terrible affliction; Rosemary’s Baby played upon the high-anxiety of pregnancy and child-rearing; Hitchcock’s Psycho gleefully exploited the near-universal fear of random, unprovoked violence. Paranormal Activity will stand out for a long time in my mind (and I’m sure others) because it hits just the right panic buttons inside the brain: the familiar fear of the creaky, empty house at night – but more importantly, the high-anxiety of being in a relationship.
The latter theme is only subtly touched on, due to the nature of the POV (it would’ve stupid to have the couple record their dramatic fight moments), but that current is always on and running, coursing through the cinematic subtext. Anybody you partner with in life is bound to come with baggage – Katie’s baggage just so happens to be a freaky demon. Micah is portrayed as something of an alpha-male stereotype – brash and insensitive a lot of the time, you know the picture – but also as a guy who is genuinely trying to help his chick sort out all of the crazy in her past, so they can be happy together in the present. And, like real-life relationships, sometimes the best intentions…