I love Silent Hill. Part 2 is the scariest game ever. The use of camera angles, the music, sound effects, confusing story...they all contribute to a weird, original experience.
And that right there is not only the key to a terrifying game, but the big difference between Japanese and American horror. The Japanese understand that the key to effective horror is to utilize the idea of "weird" to create an original experience. Familiarity is a killer. Familiarity is boring.
The game, or movie, becomes predictable = no fear. You want the audience to have no idea what's going on, what to expect. So what keeps them playing? After much thought, I figured it out: Give answers, yes...but the answers must also present more questions. It's never-ending. Therefore, in theory, the suspense, the horror, should last until the end of the movie/game.
Look at popular American, supernatural horror films. Which ones work? Aside from The Ring (which is a remake of Ringu), for me anyway, I'd say none work. US ghost movies and games fear being too weird, too confusing. Everything has to be spelled out, and that's a no-no in my book of horror.