'Found Footage' describes a genre of filmmaking in which all or most of a film is presented as discovered video recordings, supposedly left behind by missing or dead protagonists. The filming may be done by the actors themselves, and is characterized by shay camera work and naturalistic acting. Many of these films, though scripted, are made to give the impression that they are footage of real events. Most often this type of filmmaking is found in the horror genre, but the current success, and the low-budget, of the style has caused it to branch out.
The first film to employ this style of filmmaking was 'Cannibal Holocaust' in 1980. The concept is that an anthropologist travels to the Amazon to determine the fate of a missing American documentary crew. He finds their tapes, which reveal how and why they were murdered. As this was an innovative style of filmmaking at the time, ten days after the premiere director Ruggero Deodato was charged for murder, because people could not understand how the film's graphic effects were achieved without actually killing anyone.
The film that popularized the Found Footage genre is The Blaire Witch Project in 1999. Perhaps it is the first-person perspective , the character rawness through use of naturalistic acting and unknown actors, and the realism of the events through the lack of special effects and typical movie imagery. Found-footage films are stripped of formal lighting, framing, acting, etc to give the story a much more immediate and realistic feel. This is why it works so well for the horror genre, because the audience is lead to believe that what they see on screen has actually happened.
One of the more popular examples of a Found Footage film is the Paranormal Activity franchise in 2007, which was immensely profitable and inspired a slew of imitations, as well as inciting five more Paranormal Activity films to be made. The next film in the franchise, spin-off 'Paranormal Activity: The Marked Ones' is set to release in January 2014, and Paranormal Activity 5 is currently in the works with a release for October 2014. Other horror films to follow suit with the success of the found footage style are REC, Cloverfield, The Last Exorcism, Grave Encounters, and The Devil Inside, to name a few of the more popular ones.
Found-Footage style filmmaking branched out with the release of teen party movie Project X in 2012, as well as the scifi movie Chronicle, whose success proves that found-footage can be applied to all genres of film.