The Blair Witch Project cost around $250K to produce. And, based on the (intentionally) piss-poor production value and (intentionally) sophomoric acting talent, I think they paid too much...but that's a different topic...
The Secret to the Success of The Blair Witch Project was pure marketing. As much as I despise the film, the commercials were great. At least the first 2 million times I saw them...
While I keep hearing how "little" the movie cost to make, I've not heard any totals for how much the advertising campaign and it's line of hype added to the total. From my own experience in supporting the advertising arm of cable network, they dropped a hell of a lot more than $250K.
And, for the record, the movie "Clerks" only cost $27.5K to make.
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DavidRM
Samu Games