It’s Fourth of July in the seaside tourist town of Claridge, Md., on the Chesapeake Bay. All is well. The parade is forming up on Main Street. The kids are tubing out in the harbor. The annual crab eating contest is in full swing.

Then the bad things start to happen. A million dead fish wash into the marina. Blackbirds fall from the sky. Some Claridge residents begin to break out in terrible, painful lesions. Others start hemorrhaging. And the less said about that crab-eating contest, the better.

That’s the set-up for the found-footage horror film The Bay, new to DVD and digital this week from director Barry Levinson. That’s right, Barry Levinson—director of Diner, Rain Man and The Natural.

The Bay opened in a handful of theaters last November and quickly sank from view, which is too bad. It’s an effective horror picture that avoids much of the gimmickry usually associated with the found-footage thing. It’s also a movie with something to say. The Bay is thoroughly steeped in ecological anxieties about pollution, pandemics, infections and runaway superbugs finding interesting disease vectors into your body.

Levinson frames his movie with the on-camera testimony of one Donna Thompson (Kether Donohue), eyewitness to the terrible events of 07-04-09, who is cooperating with a Wikileaks-style group to expose a government coverup. At the time of the incident, Donna was a intern with the local news station, filming the Independence Day celebrations.

As Donna recounts the horror, Levinson splices in sounds and images from a dozen sources: surveillance cameras, police car dash cams, 911 calls, smart phones, surgical exploratory cams and of course that one relentless dad who won’t put down the camera on vacation. We follow a handful of characters and their stories on that day, including Donna and her cameraman, a pair of oceanographers and the town mayor.

I don’t want to give too much away, but it’s safe to say that the citizens of Claridge don’t fare well. It seems that the coastal waters have been poisoned over the years with nuclear materials and steroid-laced runoff from the local chicken processing plant. We hear alarming details about fungal bacteria, crustaceous isopods and something ominously referred to as “a new form evolve.” Rumors fly: Is it biological warfare? Terrorism? Cults? Aliens? Whatever it is, the government wants it kept quiet at all costs.

The Bay borrows quite a bit from Jaws — the tourist town besieged, the weaselly mayor, the perils of swimming. But it’s uncommonly thoughtful in its use of found-footage technique. Levinson leverages the very limitations of the form, leaving some details maddeningly obscured and confounding our expectations of how horror scenes are supposed to play out. You don’t get reaction shots with surveillance cams.

In the DVD extras, Levinson drops a few additional behind-the-scenes bombs. The film actually grew from a documentary project he was asked to direct concerning pollution in the Chesapeake Bay, and many story elements were drawn from the documentary materials. “It’s a movie,” Levinson says. “But it’s based on 90 percent factual information.”

The film certainly taps into contemporary fears. Just this week the CDC warned about a new drug-resistant strain of bacteria spreading in hospitals nationwide. A recent book on the Vietnam War suggests government coverup operations on a scale even the conspiracy-minded didn’t think possible.

The Bay is one of those little gems you occasionally find cycling to DVD after negligible theatrical runs. It provides good scares for 90 minutes, then some disturbing ideas to keep you up at night afterward.

Also New This Week:

Disney’s animated comedy Wreck-It Ralph is the kind of movie that’s a genuine commodity for parents, in that it’s just as entertaining for grown-ups as for kids. Gamers will have fun counting the references to old-school 1980s arcade classics. Nice extras on the DVD package too, especially for animation geeks.

Hard to believe it’s been two decades: The new Schindler’s List: 20th Anniversary Limited Edition includes DVD, Blu-ray and digital copies of the film, plus a brand-new feature-length documentary.

Wolverines! Chris Hemsworth, Josh Peck and Josh Hutcherson star in Red Dawn, the remake of the 1984 Cold War classic. This time around, the kids must defend their hometown from a North Korean invasion. Interesting note: The bad guys in the movie were initially Chinese, but that was changed when producers realized it would impact certain foreign market profits.

Bruce Willis and the always-interesting Rebecca Hall headline Lay the Favorite, the kinda-true story of a Vegas exotic dancer who finds she has a talent for sports book gambling. On the down side, the movie doesn’t really work. On the up side: Rebecca Hall!

The Intouchables, Playing for Keeps, California Solo, Collaborator, Unconditional and Interview with a Hitman.