Here's the run down of how this movie is linked to the first. Katie, the main character in the first has a sister who married an older man with a daughter and they just had a baby named Hunter. Throughout the movie the demon is after Hunter and we find out why later one... It's a really lame reason, just so you know. Katie shows up a few times in this one, as does Micah. And, in fact, Katie plays a pretty important part.
The problem with this movie is it tried too hard to incorporate the first one. It takes place a few months before Paranormal Activity occurred, and kind of completely undermines the premise for the first movie. It explains why the demon is after Katie's family (apparently some distant relative in the past made a deal with a demon to give the first son that is born to that family to it if they became rich or something dumb), it shifts the story of childhood traumas about the demon from being mostly Katie's to being mostly her sister's (who is the step-mom in this story), and then it straddles the events of the first one and ends after Micah is killed.... making the fear factor slow down a lot in between. Then, at the end, after Katie's sister is possessed, they decide the only way to get the demon to go away is to give it to someone else. And some site they were looking at (on a site probably named convenient-plot-devices.com) said it had to be a blood relative so they choose to give it to Katie... SURPRISE! And THAT is how the demon comes and starts messing with her in the first movie. And then it shows the stupid dad/husband burning the picture of Katie when she was a child as part of the demon-transfer ritual. Again, undermining the greatness of the first film. GAH!
When they finally reveal that Katie's sister was actually going through all this paranormal stuff before she was I was thinking that eventually maybe the demon would be visiting both sisters at the same time... and I guessed that at the end something would happen to make the demon unsuccessful in taking Katie's sister and so he would use Katie to get the baby. But the whole random thing about the family consciously deciding to pass the demon to Katie was such a stupid way to get to the end. My idea was better, I feel. And of course at the end, after they have exorcised Katie's sister, it flashes to the night Micah was killed and Katie shows up to her sis's house covered in blood. She snaps brother-in-law's neck on the couch, which rocked since he's such a jerk the whole time, and then goes up stairs and kills her sister. Then, Katie leaves the room carrying Hunter, the baby, and we hear him laugh. Then there is a black screen for literally a minute before the credits start... WHY? Who knows... but the whole things was perplexing in one way or another.
I would say what totally ruined this movie completely is the fact that all of this happened because some stupid ancestor made a deal with a demon. What made the first movie so scary was that there WAS no reason. It was random. And HOW do you even meet a demon to make a deal with one? And how do demons have powers enough to make deals with souls....? DUMB.
The only good scene that actually really impressed me was when Katie's sister was down in the kitchen and there is all this boring waiting around. I expected a pot to fall or something like that, but instead every single cabinet, drawer, container, etc opens all at the same time in the entire kitchen. It was very surprising and something we hadn't seen in the other movie. Everything else that happened is something we had already seen versions of. Though, I will also say the scene where Katie's sister gets her legs knocked out from under her TWICE and dragged down the stairs into the basement (then the basement door slams quite frighteningly) was also pretty great.
Overall it was a big MEH. But we had fun making comments about it as we watched!