Right now I'm doing some checking on contract law for another debate since it's not an area of specialty, so pardon me if this isn't up to my usual standards.
The opinion I've been standing by for a long time now is that being scared is by definition an uncomfortable experience, one that tends to be enjoyed retroactively. To truely scare someone you pretty much have to expose them to things they are not comfortable with.
Video games are incapable of being truely scary I feel, because the industy as a whole is too willing to back down to censorship, and does not push the envelope, which is what horror demands. In general there is no such thing as "psychological horror", I feel it's a term that has been largely coined by the media industry in general (including movies and the like) to try and talk-up things that are merely creepy as opposed to scary.
Simply put things like rape, mutilation, torture, and similar things are all taboo subjects BECAUSE they scare people, and to truely get a fear reaction you have to go beyond the audience's comfort zone. You'll notice that such things are used to lure in fright-fans, but rarely if ever do such movies deliver on the lurid premise. Most of the serious action either being implied, or glossed over.
When it comes to violence, it's also a touchy subject, as generally speaking "realistic" violence and depictions of what things would look like are frowned upon. Typically you either see little or no graphic violence/gore, or so much violence and gore that it's totally unbelievable and while it might upset some people, it also sort of destroys the nessicary atmosphere.
As a result I feel most things claiming to be horror are mostly pretenders. Grotesque for sure, but truely frightening? I suppose if these things were to really happen even the worst movie premise would be absolutly terrifying, but in the end your watching a movie and I've found very few pieces of media are willing to do what it takes to freak out an audience for real, however such things while always rare, are seeing fewer and fewer new additions to add to their number.
To be honest I don't see writers like Steven King as really being "masters of horror" from a lot of what i've read. I think he, and others, are so famous because they manage to walk a fine like where they create things that SHOULD be scary, or so we're convincingly told, but in the end really aren't all that frightening in the form they are presented. Much like a fairground "haunted house" on a lot of levels.
The same applies to horror games.
Such is my opinion on the subject. I think that in general we're pretty much in a long-lasting dry spot for horror. Even things like "Saw", and "The Blair Witch Project" which started out with potential, have been destroyed by sequels and imitators. While entertaining still "Saw" for example has become increasingly so unbelievable in the way it's been set up (never mind the death traps themselves) that it's increasingly difficult to suspend disbelief in the right ways to get scared. "Blair Witch" itself lacked any kind of satisfying conclusion (and no, I do not think an unresolved mystery is the best kind, but a cop out. Ideally the resolution should fit the rest of the story, explain everything, and remain frightening), and sparked dozens of imitators, while a scant few might have actually outdone the original in some ways (the violence at the end of "June 9" for example is one of the best renditions of beating people to death with hammers I've ever seen), it lead to a bunch of people figuring that they could make a successful horror movie by running around with a Camcorder and acting stupid while nothing much happens for 2 hours before a finale involving a mask from halloween depot or something.
