So how did he do it?
In interviews with The Guardian and with Peter Hall on Cinematical, Peli explains his approach.
What was your approach to maintaining tension and the audience's interest with just 2 people and 1 camera?
It was very difficult to begin with having just two characters and one location, so I knew it would be a challenge. We just had to be sure the nights were progressively creepy and that there are enough interesting things happening during the day that actually contribute and weave threads into the plot that progress it so that the following nights have new meanings, particularly to what happened the previous day. It was very tricky, which is why it took so long to edit the movie.
Paranormal Activity opens in the UK on Wednesday.