Amen to getting the horse

Amen to getting the horse before the cart.  When I see layouts in raw, unfinished basements, it's a bit of an eyesore.  I moved into a house end of 2017 with a basement that looked like this:

The good news is the basement was all framed in - which is a major head start.  But as much as I want to get started on a layout, so far it's been over a year waiting because the main floor needed a lot of work first, and the basement didn't get much attention until about 9 months went by.  Starting last Nov got permit and am not well into drywalling. 

Speaking of drywall, I prefer it over wood paneling like what was in the video.  With drywall, you can paint it sky blue or even paint a back drop on it like Rob Spangler did on his wp8th sub.  So I would recommend drywall to anyone finishing a room for a layout.

Wife and I got about 900 sq ft of suspended ceiling from someone last fall so once the drywall is done being mudded and sanded and primered, ceiling is next.

So for in this case:

Phase 1: stud framing ( already done in my home when bought)

Phase 2: install any necessary plumbing (if there is a bathroom or utility sink) and electrical outlets.  One thing I missed having in my old home basement was a utility sink.  Having one of them is really handy for cleaning up those messy things like paint brushes, mudding knives and trays, mixing plaster for scenery etc.

Phase 3: ceiling and lights (drywall or suspended).  In my case I am going suspended and going to use 2x2 LED troffer lights - planning on 4k temp, dim-able.

Phase 4: floor - planning on tile as hey, this is a basement - something that can stand water if necessary.  I do plan on getting some cheap 2x2 carpet squares to throw down on top, but main floor will be tile.

Drywall vs Hardboard

I'd agree that Drywall is ideal. For me though, I haven't had great success hanging it myself. If I had a professional doing this for me, absolutely.

Another consideration is that the rest of this basement room is hardboard as well. My choices were to redo the entire room in drywall or try to match the existing hardboard as close as possible. I chose the lazy route. 

Also, in my experience water and drywall does not mix well. Should this basement flood (as it had at some point in the past) The drywall would need to be ripped out and replaced. No saving that.

As far as backdrops go, I have a bit of a unique situation in that I will have around-the-wall staging behind the backdrop and so my backdrops will be painted on hardboard which is offset from the walls by a few inches.

I had never hanged drywall

Here is the thing about flooding.  Whether it's drywall or something else, you can get mold after flooding, so you would be forced to rip out and/or treat the affected areas.  I had flooding in my last basement when the sump pump failed and there was about an inch or so of water in 2/3rds of the basement.  I cut out the bottom 1 foot of drywall and most of it was unaffected except along one wall where mold was just starting to grow.  I threw out the affected drywall and bought, cut and hung the parts needing replaced.

Before that happened, I had never hung drywall before.  And btw, when you hang drywall you put spacers in on the floor so it is about a half inch or so elevated.  So any minor water will not affect it.  If it's a major flood, my guess is you'd have to rip out the wood paneling as well as it would get mold growing on it likely.  You don't see the space because wood trim covers it along the floor.

I found it was easy to cut out the bad drywall with a drywall saw.  After my wife and I treated the water affected areas to prevent or stop the beginning of mold, I bought 1/2 inch sheets of drywall from Home Depot and found it was actually very easy to hang.

You just score it with a utility knife and snap it to get pieces the right size or cut it with the drywall saw.  Then using a cordless drill, drive 1 1/4 inch drywall screws through the drywall into the studs so they are just a bit deeper than the surface.  So easy.

Then of course you have to cover the seams with tape and mud; that part I watched youtube video's and took a bit of practice but in the end, it came out pretty good.

Now doing a 700 sq ft basement is MUCH bigger than just replacing the bottom 1 or 2 feet of drywall like I did before, but it's all the same principle.  You do need to invest a small amount of money into having a 6, 8 and 10 inch drywall knifes and pan, and some sanding blocks.

At some point get your feet wet and give it a try.  Of course YMMV.  The previous owner replaced drywall in one basement room after a leaking pipe in the wall had to be replaced and sealed.  Where he taped and mudded, it was pretty lumpy but I suspect he didn't have proper drywall knifes because with them, you can skim coat around the joints nice and smooth.

Here is a link to the new basement and my DIY drywalling.

https://model-railroad-hobbyist.com/node/32897?page=3

Here is the old layout room being prepared for layout - and before floor got partly flooded.  It was finished already - even had a rug in it but the rug went bye bye - that's one thing I won't put in a basement based on experience.  They don't like water much!