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How can developers create truly immersive horror games that balance fear and engagement?

Horror games have always fascinated players because they evoke strong emotions like fear, tension, and excitement. However, developing scary games that feels both immersive and engaging is not an easy task. Some games rely heavily on jump scares, while others build slow psychological tension through atmosphere, sound design, and storytelling. From a developer’s perspective, what are the most effective techniques for balancing these elements so that players remain scared but also motivated to continue playing? Should horror games focus more on psychological depth (such as isolation, mystery, and unsettling storylines) or on action-driven mechanics (such as survival combat and resource management)? I’m curious about how different approaches impact player retention and long-term enjoyment.