A no-budget horror film has taken Hollywood by storm after taking $7million on its first weekend even though it was only shown on a mere 160 screens across the U.S.

‘Paranormal Activity’ was made for just $15,000 and features a cast of unknowns, but a viral marketing campaign has spread across the internet like wildfire persuading thousands of moviegoers to check it out.

‘Paranormal Activity’ is about a young middle class couple who have just moved into a starter home in San Diego. After becoming convinced that an evil presence lurks in their bedroom at night, they decide to set up a video camera to catch it. The film, which was made mostly on a handheld camcorder, stars newcomers Micah Sloat, who plays the cocky Micah and Katie Featherston, who plays sweet and charming Katie. It turns out that Katie has been haunted by dark spiritual forces since her childhood, which have followed her from house to house. When odd things start happening around Katie, her boyfriend Micah decides to film the occurrences in the hope of capturing something on tape or putting her fears to rest.

The movie trailer is a low budget triumph which was released only on YouTube and garnered nearly 1.5 million views. The trailer intersperses clips from the movie with footage of a screaming audience at a test screening. The movie opened in late September with midnight screenings in just 13 small college towns. From there, it became a Web sensation with fans hitting up Twitter to Facebook demanding a nationwide release.

Since then over 1,000,000 people from around the U.S. demanded the film play in their city by logging on to ParanormalMovie.com. The hype surrounding the film has it on the verge of outperforming a host of big budget films and is the first major studio film to be released nationwide in the U.S. as the result of online requests from the public. In response, Paramount Pictures will release the film nationwide in the U.S. beginning Friday, October 16.

Shot three years ago by Oren Peli, an Israeli-born filmmaker, in his own house, the 99-minute film played a few fright festivals in 2007. Paramount purchased the film in the New Year after its unknown director, Peli – a 39-year-old video game designer from California – showed it at the Slamdance Film Festival.

‘Paranormal Activity’ is being compared to ‘The Blair Witch Project,’ a low budget thriller which ended up an international phenomenon, grossing $140million.