First and foremost, Herr Teufel... Can you try splitting up your superparagraph into paragraphs next time? It's like trying to read a brick, obnoxious and stagnant, there's no reprieve from the neverending wall of text, because if you happen to look away you may misplace where you were within it and have to start over again.
I respect your right to an opinion, but at the same time, I'm going to pick it apart.
You claim to be a 'huge fan' of Lovecraft, and yet, here you are decrying the Call of Cthulhu. I wonder how much of this bias stems from the fact that it's Lovecraft's most famous of stories, and thus in your eyes "should have been the grandest of his stories." To be honest, Cthulhu was the first Mythos story I read, but it's far from my favorite.
You complain that the film quality "was digital." Well of course it was sir. A movie grade film-based camera would have run the production a LOT of money; not to mention made the editing process take far longer. "The budget is obviously less than $1,000" though was just a ludacris thing to say.
Kevin Smith's first movie, "Clerks" cost $30,000 to make. It was very much his make or break movie, because if his movie had failed-- Smith was going to end up paying it off for the rest of his live, and most likely regretting it. Let's remember that Clerks didn't possess any special effects, and used an already established convenience / video chain for their production. If the stores themselves didn't cost them any money, where did the money go? That's how movies work; things cost money to make.
So considering that this movie accurately portrayed each of the scenes from Lovecraft's works, this movie obviously cost at the very least $10,000 and may have cost close to $30,000. Aside from the movie's budget to build sets, let's also consider the movie's budget to TRAVEL to filming locations as well. Rarely is there a such thing as a $1000 movie.
You say the acting is terrible, though I wonder how you come to this conclusion. The characters were quite strong despite their inability to speak throughout the movie. I was rather impressed with how capable their acting came off, considering that it's hard to make anything silent and maintain the plot of the story without leading the audience with a LOT of text.
But alas, here comes the real problem. "I had real high hopes for the movie." This stems back to my comment on bias based on Cthulhu's popularity; because you consider Call of Cthulhu to be such a masterwork, you deem that anything and everything attached to the name be an equal masterwork that needs a budget of $200,000,000, and Peter Jackson (oh wait, he's having trouble finding work in Hollywood after that last stunt...). Independent film is about art, not about Hollywood.
Howard Phillips Lovecraft was a horrible man, if you consider his merits. He was a racist (especially a hater of jews), and his racism was to the point that he estranged his very wife, a jewish woman herself. But when we overlook these terrible virtues, he is considered an excellent pillar of history, having helped shape both the literary and popular culture worlds (and thus having helped shape society as we know it today). Remember, it takes diff'rent strokes the move the world.
"Dreams in the Witchouse" is very interestingly done. It's very much adaptive, and the 21st century (as opposed to the original) feel makes it something people can identify with easier.
And then, you decide to directly attack the HPLHS about their budget, but attack them lowering your original $1000 estimation to "$20." That's just rude and ignorant. Do you know what it costs to buy, rent, or make scaffolding? How about the clothing? Camera? Sound editing? Mixing? Mastering? Lumber?
Try looking up what it would cost to get the steel for a single scaffold. "$20" indeed.
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