Cargill said in the past that “Sinister” was inspired by a nightmare he had after watching “The Ring” – that’s why the movies have the same spooky gimmicks of the cursed movies curse:
“I was climbing into my attic when I saw a box with Super 8 movies and a projector in it. I had edited the first movie and that was the opening image of ‘Sinister.’ That nightmare stuck with me for a while, and I eventually realized it could make for a pretty good horror movie.”
The sight of this nightmare re-enactment must have been horrifying. However, to make a movie, you need more than a scene, you need a story. That’s what confused Cargill: explaining who’s going to make these sassy spins in the movie, especially when he feels, “You have to have a better answer than the audience has in mind.” He ends up thinking it’s a missing child from each murdered family, but then needs a motive for the kids. That’s when he got the idea of a supernatural influence.
At the beginning of the movie “Sinister”, Ellison Oswalt (Ethan Hawke) discovers 5 movies about Super 8 sniffing. Reviewing them for his book on the murders, he discovered a brief appearance of Bughuul in each book. This culminates in a genre-defying twist: “Sinister” isn’t a haunted house story. Bughuul’s image is the portal from his kingdom to mortals and that’s why he forces the kids to film the murders; With each new film, his influence spreads further.
Once Cargill had an idea for his villain, he needed to define the specifics, both in terms of design and plot.
https://www.slashfilm.com/1051613/sinisters-bughuul-originally-looked-just-like-the-babadook-until-the-internet-provided-a-different-solution/ Sinister’s Bughuul Looks Like Babadook At First – Until The Internet Offers Another Solution