I didn't know whether to put this in Good Movies or Bad Movies. I chose the former because ultimately I enjoyed it and appreciated what it was trying to do.
Granted this is part of that sub-genre of horror that The Blair Witch Project popularized, including movies like Cloverfield, REC and the Americanized remake Quarantine, and of course, Paranormal Activity. Given the flexibility of the title, the filmmaker could have chosen to make a "found footage" genre horror that had nothing to do with the original, or loosely based on the original. However the filmmakers (Tod Williams and Michael R. Perry instead of the original Oren Peli) chose to fashion this story around the original.
It shows the family life of Katie's (the central character from the first film) sister Kristi, her husband, her husband's daughter from a previous marriage, and the couple's new baby Hunter, who we see arriving from the hospital before flashing forward to Hunter as a toddler. The main events chronical the family's security camera system, mixed in with the occasional hand-held video camera scene, as they cope with the invasion of a supernatural force that seems interested in the toddler Hunter. 95% of the events of the movie happen before the events of the first movie, and we see Katie show up here and there, mostly before the events started happening for her and Micah.
It is revealed slowly that the demon who eventually continues on to torment and possess Katie is the same demon plaguing her older sister and family. It is suggested that an ancestor of both sisters made a pact with a demon for wealth and success, the recompense for said pact coming in the form of claiming the soul of the first male heir. As it happens, Hunter is the first male child to be born to that family in 2-3 generations, and so the demon is coming after his soul. All of this is revealed through the investigative teenage daughter and through the family's live-in nanny and housekeeper, who is fired by the husband earlier in the film because of her superstitious reaction to the budding supernatural events and insistence of burning incense and saying what appear to be Spanish prayers or chants to ward off the evil and protect the baby.
Eventually the demon possessed Kristi and begins to keep Hunter from the rest of the family, sometimes violently, until the husband, who has been skeptical of everything this entire time, finally accepts what's happening and remembers that the nanny tried to warn him and he didn't listen. He calls the nanny Martine to the house and she informs him that he can exorcise the demon from her and gives him a crucifix with annointed oil on it and instructs him to press it against her forehead. The only condition is that the demon will be then diverted to the nearest blood relative.
Through violent struggles, they succeed, and the demon is presumed to be out of their lives. The film then begins to show the beginnings of the first film, the demon now beginning to go through the task of possessing younger sister Katie. The film ends with Katie, the day after having killed Micah and left the house in the first film, showing up on the security cameras, as we see her snap the neck of the husband and violently throw Kristi to her death against a wall, picking up the crying baby and walking away into darkness, with a closing caption explaining that the bodies of Kristi and her husband were found the next day by the teenage daughter, but the whereabouts of Katie and Hunter are unknown.
Overall, I enjoyed the film, but it wasn't as good as the first one. I didn't like the idea of having this poor toddler be the victim of such a thing. Although we don't know the exact fate of Hunter, it can't be good. I've got two young boys and of course that hits home. My oldest boy started talking out loud to nobody in particular as a toddler for a short time when we moved into our current house and we both kind of freaked out a bit over that kind of thing. I think that's why the original movie and this one scared me.
I assumed that the same filmmaker made the sequel, but when I saw that it wasn't, it made sense. The movie just didn't track as well or seem as clever as the first one. I didn't quite the same sense of foreboding, with the exception of the realization that something bad was likely to happen to a poor toddler. It wasn't as scary, but I did jump a few times. Overall it was certainly worth the time spent and I didn't get bored.