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The general gist is that there was a research facility that was experimenting with electricity / magnetism and was trying to communicate with alternate dimensional creatures through a rift that was in the area. Accidentally, they opened the rift and let multiple of those creatures out, as well as a lot of the energy within. People who lived in the area at the time were affected, as was a lot of the surrounding area. This caused bizarre manifestations and other objects to appear. That energy can be contained within tapes, specifically the magnetic aspect. Now those tapes are a piece of illegal contraband, since the government is trying to cover up what happened. It's not entirely clear WHY they're desired, but it could be fragments of the original facility trying to continue their research. Regardless, many of the creatures let out into the world masquerade as humans, but they crave the energy contained within the VHS tapes. Hence the apartment one constantly hounding you for scraps. The three characters are the Birdwatcher (just a random civilian who is in the wrong place) the Courier (a man running tapes across the border to the shadowy group) and the Assassin (who is tasked by the government and/or another party to try and clean up leaks about the project and possibly kill any of the creatures hiding in plain sight). If you watch the tapes, the energy basically mutates you into a horrific ♥♥♥♥♥♥ up energy monster and warps you into the other dimension, hence what happened to the prison guard.
That's mostly just my understanding. It's a great game, I hope the devs do more in a similar style, that lofi aesthetic is so up my alley.
Thanks for the insight! It really helped me better understand the plot. I too enjoyed the game very much and hope the devs can tell more stories in the universe they created.
https://steamcommunity.com/app/897030/discussions/0/2590022385662762863/
tldr; I beieve the game is all taking place in the Bardo (depressing dream realm ((we've all been there in our sleep)) Hell, etc ) lore addressed by most (if not all) David Lynch films and by some Japanese authors
The ending is the woman realizing she's been in Bardo the whole time upon finding her mutated body atop the hill.
She's the one who phones her own murder in to 911
Those not affected by the tapes but rather viewing them as a recreational drug were more or less the demons staging cameras around certain places recording previous video tape murders (ie; the protagnoist's neighbor across the hall).
If you remember the protagonist is exposed to the tapes when she trips that 'Thank you for your sacrifice' video set up in the cellar of that farm house.
That explains why I saw the body's arms moving.