geeez, drosz, why don't you first go and LEARN how film budgets work. Start with http://en.wikipedia.org/wiki/Film_budget .
As a broadcast technician in L.A., the picture on the DVD looks just like what you'd expect to get from a good DV camera at Circuit City, without augmented lighting and with a good colorist. If you want an example of what a more expensive professional camera with basic lighting looks like, just watch the DVD's bonus short. (And when a production uses a $90,000 camera such as the Sony HDCAM FDW-900, they don't BUY it, they RENT it.)
Was the movie's total cost $1,100? No. Were the production costs $1,100? I have no reason to disbelieve that. The DVD bonus short talks about Andrew Reimer, who secured budget for post production, probably in the 5 or 6 figures, for proper sound mixing, color correction, opening and ending graphics, a 35mm film-out ($20-30k), composite and release prints (a few thousand dollars for each), etc. Publicity costs would run even higher, and are typically not included in a film's budget - the distributer takes the liability as part of the deal.
There's nothing unusual about the way the budgeting worked out, it's the classic way low-budget films hope to reach wide distribution. Once Herzlinger got the Barrymore footage and knew he could make a viable film out of it, they edited the movie on a low-budget friend's system, and went with it to festivals. Based on the strong positive responses, an investor went on board, so they could afford the professional sound design, color correction and film print that are necessary to bring the movie to the quality level today's markets expect to see.
And anyway, if you think the whole premise was ruined by abusing the advertised "$1,100", you really missed the point of the movie.
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