Found footage movies do away with the artificiality of filmmaking by presenting every shot as a clip pulled from someone's video camera, cell phone or surveillance video. This is particularly effective in horror movies, since it gives the otherwise fantastic events a gritty, realistic feel. It worked perfectly for "The Blair Witch Project."
Made in 1998 for about $60,000, "Blair Witch" generated $140 million [source: Bowles]. Found footage movies are remarkably cheap to make since they use a small crew and often rely on natural lighting and actual locations instead of manufactured sets. Since the success of "Blair Witch," found footage has become a popular subgenre. Examples include the "Paranormal Activity" series, "V/H/S," "Grave Encounters," "Mockingbird" and many others.
"The Blair Witch Project" wasn't the first found footage movie -- its oldest ancestor is probably "Mondo Cane," a 1962 movie that purported to show actual footage of bizarre events and started a whole craze of "Mondo" movies. 1980's "Cannibal Holocaust" faked realism so effectively that the producers were investigated for committing actual murders on film (they didn't) [source: Davis]. "The Last Broadcast" came out not long before "Blair Witch," but didn't achieve the same level of success.
How did "The Blair Witch Project" get so popular? Marketing. It was the first movie to use viral marketing, creating buzz with a website, fake documentaries and other clues about the Blair Witch mystery, a model that's been followed by dozens of horror movies since, such as "Cloverfield."