In a chat with Bloody Disgusting, Sanchez gave an update on the status of Blair Witch 3, saying, "It's completely up to Lionsgate.
"Dan and I are ready to do it. We've been toying around with a sequel idea that we really like. It's just a matter of getting our schedules in line and having Lionsgate sign off on the idea. We've been ready to do a Blair Witch movie for a long time. We're as close as we've ever been to making it happen but it's still not a guaranteed thing."
He also made it clear that the third instalment would categorically ignore the risible sequel, telling BD, "I actually liked the sequel but at the same time it exists in a world outside of the movie. So if we want to do a sequel to Blair Witch Project, we have to stay in that world, which Book Of Shadows didn't stay in that world.
"Book Of Shadows created a different world. It's like if the sequel to Jaws started with shots of people lined up to see Jaws in the movie theatre. For Book Of Shadows it worked in a certain way but to me my biggest gripe with Artisan was you shouldn't have called it Blair Witch 2.
"It would've been fine to call it Blair Witch Chronicles. It wasn't really a sequel to our movie. So [Part 3] would be a direct sequel to our film living in that mythology of Burkittsville, being possessed, haunted by something."
He added a couple more interesting nuggets of intrigue, claiming, "Right now, the idea has no first person in it at all, but we'll see… There's always room for new ideas to come in."
Sanchez also added that the three main actors/characters are expected to return, stating, "The plan is to have them [back]… They're probably not going to be the main characters but they're definitely characters in the sequel."
It's still hard to imagine a genuinely decent Blair Witch sequel. Not only because Book Of Shadows was so dire, but mainly because any extension of the story risks destroying the authentic chills and mystery of the original.
Sánchez has directed a handful of films in the last few years, although none have had the impact of Blair Witch. His latest horror, Lovely Molly, has just premiered in the US.
Source: Bloody Disgusting
Read more: Director Eduardo Sanchez talks Blair Witch 3 | TotalFilm.com