Since his auspicious directorial debut with 1982's generation-defining "Diner," which Vanity Fair recently called the most influential movie of the last 30 years, Barry Levinson has been known for crafting loose, semi-improvisational films as disparate as "Good Morning Vietnam" to "Young Sherlock Holmes" to "Wag the Dog." Best Picture winner "Rain Man" gave Levinson an Oscar in 1988, but now he's gone from "Gotta watch Wopner" to "gotta stay alive" with shocking new horror flick "The Bay."

Produced by Jason Blum and Oren Peli of "Paranormal Activity" fame, "The Bay" chronicles a viral outbreak along Maryland's Chesapeake Bay through multiple sources of found footage. The verisimilitude on display is highly effective, and you will not soon forget what an isopod is, the tiny parasitic monsters which (*gasp*) actually exist.

We talked with Levinson about this shift into found footage terror and the future of his series of autobiographical movies set around Baltimore.

The tradition of eco-horror goes all the way back to the first "Godzilla," which warned of the dangers of nuclear contamination. "The Bay" does the same thing, except the monsters are microscopic. So you've got tiny isopods, but what's the big message?

We're playing a dangerous game in terms of our ecological/environmental framework. We keep kicking it down the road as opposed to saying, "alright, look, we gotta get on top of this." In many ways, we just ignore these issues. The Chesapeake Bay is the largest estuary in the United States and it's 40% dead. We know that it's a toxic soup, that there's a vibrio virus that if you cut yourself and go into the water and happen to catch that virus you'll be dead in 24-hours. These things are out there. Can we correct it? Absolutely. Why don't we? There's a bunch of reasons. So let's take all that, let's put it on the table, use it as a storytelling device, let the facts inform the movie - 85% factual base - and it adds to the scare and suspense of the piece.

You've had such an eclectic career, with comedies, dramas, gangster movies, sci-fi, fantasy. Probably the closest you came to horror was "Sphere," so what do you think you brought to a full-on genre movie like this?

I don't know if I'm the best one to answer that question. Look, it's a movie, but I'm trying to create a credibility in it that you think, "I dunno, this looks like collected footage." So you can't be too extravagant, you can't push certain things, you have to find this place where it seems real. You have certain limitations where, as in a full-blown horror movie, you can do anything. You also don't have the advantage of some horror movies of, "Don't open the door!" The isopod is not gonna be behind the door. You have to create this sense of fright and dread, suspense and tension in a slightly different way.

You'd done documentaries prior to this. Did that inform what you did here?

Yes, it informed it. I did a thing called "Polywood" about the '08 conventions, and I did a thing called "The Band That Wouldn't Die" as part of the "30 For 30" series for ESPN. Those two, which I shot digitally, were really kinda the lead-up to this, in a way. So I thought this would be interesting. So when we approached it, we said, "How do we do this in a visual way? Let's not use high-end cameras, let's use consumer cameras. Which consumer cameras?" We tested like 100 cameras and whittled it down to about the 20-some that we used.

The film follows a young, local reporter, and your seminal years were spent working in local television. Can we find some of your own personal background in this?

I started in news as a kid. I went to American University in what was considered the communications program back then. I came from that background, I worked on the news shows and I did all that and I've always been fascinated by some kind of reporting, and in this case I didn't want a really good reporter, it's just a summer intern getting in over their head and they don't know what to do. Going the wrong direction, asking the wrong questions. I thought it would have a degree of humor to it, rather than this really factual reporter.

The producers, Jason Blum and Oren Peli, are forming a little mini-empire with these low-budget movies. What's their secret formula for Coca-Cola?

They're doing these rather inexpensive pieces. At some point you sort of redefine everything. Maybe they're turning into the Roger Corman of the '60s. Corman said, "Alright, I'm gonna go over here and I'm gonna do this. You people take that, I'll go over here." (Laughs) Could be that.

Yeah, he'd make a movie in like two days, but a lot of people make low-budget horror. There has to be some kind of brain-power behind why Blum and Peli's make the kind of money they do.

It's part of the distribution of it, too. A lot of these movies can't get distribution. For this movie, it's very difficult because we are not a 100% dyed in the wool horror movie, so for Lionsgate they're like, "Well, I dunno…" It's so cheap that they're gonna make money. We're a little outside of the box, so there will be less, or probably in our case ZERO money that they'll spend to promote this movie.

But it's getting good reviews.

It's getting great reviews, and we went to #1 on iTunes Trailers last week without any help. No push from anything. I think we might whittle our way up and suddenly find our thing on Video On-Demand, or through word-of-mouth. It's a very open door, you don't know where it'll go!

Where are you at with your John Gotti movie with John Travolta?

If it comes together, they've been struggling with certain issues. We'll see what happens there. I haven't done it yet.

About a decade ago, you wrote a fantastic novel called "Sixty-Six" which would make a perfect capper to your Baltimore series, because it literally ends with you riding off to Hollywood. Is that book riding off to Hollywood?

That's right. Funny you should say that because I'm probably going to finish the screenplay this week because I'm writing it. I played with it over the years, and showed it to my agents, but I think this is finally the draft. I think now I've got it figured out.

How will this fit into the overall arc of the Baltimore movies?

It's the conclusion, in a sense. The interesting thing about the whole diner thing is there were four groups who came through it. The "Diner" guys, the tin men, "Liberty Heights" had the two brothers, and in "Avalon" we only see the diner going into place. This one will be the last group to pass through the diner and then the closing of the diner, which is the end. It corresponded with me going to California.

Have there been a lot of obstacles getting that made?

There is, because it's the kind of movie studios don't want to make anymore, where in the past they would have, because now they're like, "Well, it's a bunch of people." (laughs)

"Yeah, who wants that? How can we franchise this?"

Exactly! If I can make it, it'll be great because it'll be five episodes in the Baltimore stories dealing with five different eras.

It was such a big deal seeing "Liberty Heights" back in 1999 at the Senator Theater in B-more. It was a full crowd and everyone knew the movies, knew that community.

Yeah, I'm fond of that movie. I thought it was a good film. Thought it did a good job of dealing with those issues.

For some reason it got overlooked. Another film of yours that is grossly overlooked is "Toys." It's safe to say there's never been a big-budget movie that surreal and far out come out of a major studio. It's crazy.

It is! It's funny, in Europe, I hear about it a lot. Here, it was considered a disaster because it wasn't set up right. It was set up as this movie for kids with toys, as opposed to this kind of black comedy that it was. The irony, as my wife reminds me, is that now all these drones and things are exactly what we were talking about. "We'll get little kids with great hand-eye coordination to fly these planes and bomb and blow up things."

And the US Army recruits people through "Call of Duty" now!

So it actually came to be, but when you don't set a movie up correctly they were like, "What the f**k, this is supposed to be a kids' movie?" No! It looks bright and shiny like a wonderful world of things, but it's a dark comedy. "Strangelove" looks like a dark comedy, but this one looks bright and shiny, that's part of the disguise of it.

It's like "Willy Wonka's Nuclear Holocaust."

Exactly! That's what I had thought all along. I read reviews that made no sense, and it literally got out of control. I'll never forget Vincent Canby's review, he said "the movie has a level of violence that in one sequence so-and-so's head is decapitated." Head is decapitated? It's when her head is on springs and she is a toy. Who's gonna talk about a decapitation? Her head popped off and she's got springs! (Laughs) We've never been great in this country at satire.

"The Bay" opens in limited release and Video-On-Demand on November 2nd.