Truly an interesting question... In my eyes all signs point to yes they are. But I personally sleep and breath Horror games so im having a hard time admitting that things are going downhill, i really dont want to believe that the genre is slowly collapsing... I must agree that Dead Space (my personal all time favorite) is pulling the genre in the right direction. Bioshock (My other favorite) is an amazing game but i dont think much of it as a horror. A couple games that I think are often overlooked are Deadly Premonition, and Alone in the Dark. Now before you flame me for these two let me explain why. Deadly Premonition in my opinion is very very odd infact its hard to take it seriously at times, but despite its oddness it is also very dark and contains an element of fear throughout gameplay. Alone in the Dark can be creepy to play when your, well, alone in the dark... However i will say that alot of the dialogue in it is very hoaky and truly takes away from the overall horror.
holladios
Deadly Premonition was unbearably boring for me from a gameplay standpoint. The levels just dragged on way too long with a shooting mechanic that never got anywhere close to being fun. I didn't get far enough in the story because I just couldn't stand the boredom of actually playing the game. On the other hand, I'm with you on AitD. I thought the game suffered in its execution but there were actually a lot of great ideas in play and overall it was a pretty enjoyable game, especially if you pass on the 360 version for the tweaked PS3. Bought both and the PS3 version is just much more playable. This is a game that sticks to its themes really well and the play of light and dark is just really creative.
One game I would also add to the discussion is Metro 2033. I really had a blast with the game and it's definitely got some intense atmosphere. Especially above ground when the glass in your gas mask gets shattered and you're running around wildly trying to find another one, your broken mask fogging up and the sounds of the air escaping as your character gasps for breath. Maybe the gameplay is not what people would call traditional horror gameplay, but so what? The themes, the atmosphere - definitely horror.
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