The problem with the film first and foremost is that it takes place in an abandoned sanitarium which has become the biggest cliché in the found footage genre of horror films (although cleverly done in the Grave Encounters films). What also throws the film off is the complete lack of originality or concern with the fact that the film has nothing new to offer. There was a moment when I thought that the film might actually go somewhere but my hopes were slashed away in the third act with the over complicated conspiracy theory of which was needed for an otherwise bland run of the mill haunted house film.
In my opinion, the found footage film can be used to great effect. This is plan in The Blair Witch Project (1999), Man Bites Dog (1992), and Cannibal Holocaust (1980) but more often than not it’s a lazy excuse for film maker to make a cheap film with no stars and a mediocre or non-existent script. Paranormal Incident is one of these films that can be completely ignored and forgotten.