First, the positives:
1. New Exciting Ideas - not always, of course. In fact, maybe rarely, but the stand-out ones do something different. They may not pull it off, but you know they tried, and if nothing else, you can see a good idea buried somewhere in there.
2. Emphasis on Character - again, this refers to the best of them, and they may not entirely succeed, but it's obvious they want you to care about the characters. They spend time on character development, they try to make them sympathetic or fascinating, etc. Unfortunately, the filmmakers may just lack the experience or understanding to accomplish this goal, and their efforts may be undermined by the writing and/or acting.
3. No Rules - sadly, this usually isn't taken full advantage of, because even though they don't have to worry about the MPAA or any studio notes, a lot of indie horror still plays it safe or does the typical "shocking" stuff like a dead baby, which is more bad taste (and gross... the easiest thing to do) than disturbing or chilling. You really can do anything you want with indie horror (yes, you're limited by your budget, but there isn't any censorship or requirements about what you can or cannot show) and yet most just copy the majors. I'm not talking just about gore and nudity but also taking more risks with the characters and storytelling. If you want to do some crazy practical effects like The Thing with people mutating and transforming, you can (it'd be wise to have a good story and characters too though). If you want to fake out your audience by killing the lead character halfway in, go for it.
Good Indie Horror: End of the Line, Slashers, Splinter, Stake Land
Now, the negatives:
1. Boring - what's the worst thing a movie can be? Yep, you got it! If you try to do a lot of character building or dialogue or atmosphere but you can't quite pull it off, this is the hell you end up in. I was guilty of this too until I went back and recut my film... and some might say I'm still guilty of it. A character-driven story is great, but the audience has to care about your characters or they get bored.
2. Slow Opening - this goes hand-in-hand with the last one, but you'd be surprised (or not) how many indie horror movies fall into this category. Even if they're a slasher and they start with a kill, they'll take forever to get to it. It's agonizing, because you know what's coming, you know the character is disposable cannon fodder, you feel no tension or fear, but you just have to sit there and wait... and wait... and wait. It sucks. Again, I'm an idiot, and I did this too since I thought there was tension when there wasn't so then I reshot the opening, trying to make it as exciting as possible.
3. No FX or Shitacular FX - bloodless horror movies can be good, but they take a lot of skill and experience to pull off, which someone making their first film probably won't have. So it isn't a bad idea if you're making a horror movie to include some of the red stuff, but even if they do, indie filmmakers tend to use ridiculously fake CG blood or just some truly atrocious practical FX. Just because you're making an indie film doesn't mean you can't have great FX and do things no one has ever seen before. Yes, you probably can't show the earth melting or an interstellar war out in space, but you might be surprised what you can do with a talented FX guy or even taking the time to teach yourself.
4. Copycat - on the opposite end of new ideas, you get the indie horror that is the same shit you've seen a billion times. 5 idiots go to the woods. 1 psycho picks them off one by one. This formula can result in something good, but you have to do something new with it, have good characters (the soldiers in Predator for example), a great fuckin original monster, awesome FX, inventive kills, etc. You can't just ripoff the movies you love.
5. Crappy Dialogue - everyone wants to think they're Tarantino, but they're not. Dialogue is tough to write, and it's hard to say with absolute certainty what good dialogue is. It has subtext, it's specific to each character's unique voice, it isn't obvious and on the nose. Hell, it's hard to define and completely subjective, but we can probably all agree on bad dialogue. It makes your eyeballs melt into the back of your head. If someone says your dialogue is bad, listen to them. Ask them why. See what they suggest. Make sure character A and character B don't talk the same, and make sure they don't all sound like you. Each character needs to be different. My dialogue was not very good either.
6. Bad Acting - another thing people always argue about. Check IMDb and a movie you think has perfect acting. Odds are someone (or a whole bunch of assholes) will say the acting in it sucks. It's so easy and pointless to say the acting sucks. What does that mean? How does it suck? It's much harder to articulate that, and I don't mean the really, really bad that-guy-is-a-machine-reading-his-lines acting. A child can spot that. I mean when two different people watch the same performance but one says it sucks while the other loves it. That type of contradictory shit eats your soul. Majority rules I suppose, but what about half and half? Anyway, a lot of acting in indie horror probably isn't the best. The actors tend to be inexperienced with directors unsure how to help them, and if you combine that with shoddy writing, it's a recipe for agony. If you can't find a good actor, keep looking. Learn about acting yourself so you know how to communicate with them and what not to say. Don't settle for a bad performance (do a lot of takes if you have to), and then cross your fingers that other people think it's good too.
7. Terrible Writing - this is probably one of the biggest reasons why indie horror fails so often. Writing is extremely difficult, and it doesn't help that everyone thinks they can do it. Everyone can do it, but to do it really, really well, you have to write all the time, read books on writing, read other scripts, identify your own strengths and weaknesses, get honest feedback from people, learn from your own mistakes, etc. Writing can be an insanely tedious excruciating exercise in pain or it can be the most rewarding thing of all, but it takes work. A lot of work, and obviously, most indie filmmakers are not that experienced yet, but what you learn making your own movie is something that can never be taught.
So in conclusion...
Is indie horror the most wretched thing of all time? No. Is it often not very good? Yes, but can it be good? Yes. Can a filmmaker go from one truly bad p.o.s. to something extraordinary? Not likely, but maybe. More possible would be going from a mediocre movie to a pretty good one or from a pretty good one to an excellent one. They could also get worse too, but I'm trying to be positive here. There are definitely some gems out there (End of the Line, Stake Land, Splinter) even in no budget land (The Horseman), and you'll also get some filmmakers who have made outstanding movies after mediocre ones so don't be afraid to do some digging (and a little research with reviews). If you look hard enough, you'll find something incredible.
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