Ironically, the godfather of this low-key, viral campaign is America's most commercially viable director. Steven Spielberg first watched the movie more than a year ago; reportedly, he was so shaken by the experience that he became convinced that the movie was haunted. While this story seems unlikely, one thing is certain: Spielberg was impressed by the film and wanted his studio to own it. Shortly after he saw it, DreamWorks bought the ownership and remake rights to the flick.

There are some interesting connections here. Spielberg's breakthrough masterpiece, Jaws, from 1976, is widely considered the first summer blockbuster. Prior to Jaws, movies were typically released on a handful of screens -- The Godfather, in 1972, opened at just five -- and, depending on their popularity, distribution would expand.

Jaws changed the game. After its successful advance screenings, the movie was released in 465 U.S. theaters. Within a month, it was on 675 screens nationwide. That's miniscule by today's standards, but at the time, this was the largest single distribution of a film. Jaws went on to gross a record breaking $470 million worldwide.

Since then, the wide-release model has evolved into today's practice, wherein major studio films open on a large number of screens, stay in theaters for a few weeks, then disappear. Transformers: Revenge of the Fallen opened on June 24 on 4,234 screens, but you'd be hard-pressed to find it three months later. Today, the promotional machine leaves little time for a movie to slowly build a following and become a blockbuster. Whether a success or a failure, it's gone within a few months.

So the release model for Paranormal Activity represents a return to the classic audience-driven strategy. However, by using the internet to draw viewers in advance of its release, producers are pulling a lesson from the success of The Blair Witch Project and guaranteeing a solid audience for their movie. If it works, this strategy could open the door for other low-budget viral promotions, offering a distribution model that's ideally suited to small-scale, independent productions.