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[Stroggy]

Games that are actually scary are far and few. It needs good scripting, good music and (most of all) good characters and story. You don't even need an entire haunted city to make the player scared, more often than not a house or laboratory with claustrophobic rooms does the trick far better. Just look at the Cradle mission in Thief III, That mission was seperated in two parts: the first part did not have one enemy but it was still quite scary thanks to the setting, the sound (or lack thereof), the second part had 5 or 6 enemies but I think that even without the scary zombies (or whatever they really were) lurking around the place would be as scary thanks to the convenient logs left around which gave the player a look into the history of the place.

While a lot of Japanese games manage to scare the player, the player is usually scared of the monsters (or huge bosses) and not all that scared of the setting.