I get that the real issue isn't just YouTube, but that no other horror film, or otherwise, has really matched Blair Witch Project's combination of impact, marketing success, micro-budget, and cultural phenomenon.

I just speculate that if Blair Witch Project were made today, it would likely debut on a platform like YouTube before gaining wider recognition.

The best example I can think of is already mentioned up-thread, but just to drill down on that. Kung Fury[1] was initially released on Youtube (and a few other services, mostly in other countries I think) and became a pretty big viral hit. Enough so that the filmmaker eventually signed a deal to make a sequel[2] with distribution by a traditional film company and some big-name stars. Unfortunately the release of the sequel has been held up for "legal reasons" and FSM only knows when or if it will see the light of day. :-(

Anyway, not as big as BWP, but still a decent example of the concept under discussion, I think.

[1]: https://en.wikipedia.org/wiki/Kung_Fury

[2]: https://en.wikipedia.org/wiki/Kung_Fury_2

Just because the quality of the things people upload there isn't up to the arbitrary standards of "as good as the Blair Witch Project" doesn't mean its less valuable