There are several types of sequel. There's the continuation of events, where you follow the original cast into new adventures. There's the ramping up of events, which takes the original scenario and makes it bigger/more deadly/adds another puppy to the mix. There's the conclusion, which is generally supposed to be the ending of a series (until some studio executive with a hankering for another suck on the cash cow remembers it). In the case of Demons 2, the film falls into more or less the same category as Evil Dead 2 - both a sequel and kind of a remake at the same time. Yes, it's a little confusing.
This time, we're in a tower block instead of a renovated cinema, but there's still quite a few characters from the first film hanging around if you look carefully - the Sylvester Stallone-alike punk is now the security guard, for example, and Tony the Pimp is now Hank the Gym Leader. One of the residents of the tower block, Sally Day, is having her 16th birthday party, but she and several others in the block seem to be more interested in watching a "docudrama" about the threat of the Demons (thus suggesting that the events of the first movie actually happened, and that this movie is set some time after that, when people have somehow sealed off the Demon-infested areas and then gone on with their lives). Things go all pear-shaped, however, when a demon escapes from Sally's TV set into the real world to possess her. She then goes on to attack and transform her party guests, who then go rampaging through the tower block, and... well, you get the picture. Our heroes for the rest of the film are Hannah and George, a heavily-pregnant couple of (apparently) Physics students who have to fight to escape the apartment block and the pack of demons roaming the halls and stairways.
Right, let's get this out of the way first. Remember the deus ex machina of the first film? Well, Demons 2 doesn't go quite as far, but we do still have to check our disbelief at the door when a heavily-pregnant woman in labour climbs onto her boyfriend's back and they absail down the glass-fronted side of a building. Yeah, I know I shouldn't pick at moments like this, especially in a B-movie horror involving demons who can come out of TV sets, but stuff like this just bothers me, okay? There's B-movie absurdity, and there's movie-breaking absurdity, and one of these can totally destroy a movie's flow.
As for the rest of the film... well, it's mostly like the first movie - demons attack people, people transform into demons, repeat as necessary with appropriate amounts of gore. Tony the Pimp/Hank the Gym Leader gets a much bigger role in this movie, organising the survivors into a group to try to fight off the demons and having more success than he did in the first movie (admittedly that's not too hard, all things considered), and there are plenty of gory, splattery kills to go around (including one gym rat who pays the ultimate price for wanting to do just one more set of reps). Demons 2 also takes a brave step in having both a dog and a small child get transformed into demons, rather than having them be rescued by our heroes so they can walk off into the sunrise at the end - in the case of the latter demon, however, they then decided to have a second demon emerge from the child's body like the unholy lovechild of a Gremlin and a Chestburster. Honestly, you probably could have made a child's toy of the resulting demon and sold it alongside Boglins and no-one would have batted an eye.
And that sort of thinking is probably where Demons 2 falters. It remembers all the cool stuff it had in the first movie, and tries to bring all of that back, only better, in the sequel... but misses the mark and ends up more baffling than anything else. There's even a subplot that goes through half the film about four punk teens driving to the party, much like the Sylvester Stallone-alike and his friends... except the subplot is a complete dead end this time, making you suspect it was only put in there so we could listen to some more 80s New Wave/Punk (hey, I'm not complaining). In the end, Demons 2 is a good enough film... but it doesn't live up to the manic carnage of its predecessor, which is a shame.
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