I can't count the number of times users have told me that a not-very-scary game is better "on hard mode." Many of the games that I've complained about on this site have been defended by users claiming that hard mode is where the game design really works. Dead Space, Cold Fear, Silent Hill: Homecoming, and even Resident Evil: Dead Aim have all been credited as being better games when the difficulty is increased. This seems like evidence that supports the "harder is scarier" idea. In my review of Dead Space, for example, I spend most of the words praising the game and then trying to figure out why I didn't enjoy it very much. I ended the review with the conclusion that Dead Space doesn't require any critical thinking, and is altogether too "straightforward." Another way to say the same thing might be to say it was too easy; I walked through the game and never really had to put any real effort into it. Per the Two-Factor Theory, my brain never got a chance to mislabel my body's reaction because my body never reacted.
I think the key is not to make the game actually hard, but to make it SEEM or FEEL hard. Think of the first Resident Evil for example: the fact is there is enough ammo in the entire game to kill every single enemy with guns (if you don't count that one glitch that make enemies respawn in one of the room). But to this day, when talking about it, most people still claim that the game doesn't have enough ammo to kill everything. That's because, even if it's not the case, the game makes the player BELIEVE that there is not enough ammo. For example, it does this by making the player have to find the ammo by himself (inside shelves, behind a desk, etc) rather than having the ammo convienently spawn on a enemy corpse when you kill them, like in every other game. (on a side note: you will notice that RE4 went back to having ammo and herb spawn out of dead enemy corpses. The game even spawn ammo and herbs according to what you have left in your inventory. This is one of the many reasons why RE4 was not SURVIVAL horror anymore but action horror instead).
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