I've always been a big Silent Hill series fan and have found those early games were fantastic with their atmosphere, story, and OST. Another one of my favorites has to be the Fatal Frame series. I remember having it on a demo disk and was afraid to let the ghost get me so if I ran outing film I'd turn off my Playstation 2.
Cry of Fear is also a great game if you haven't played. Similar to Silent Hill in some ways but in first person.
What is your favorite horror game or horror genre?
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I like Dead Space a lot but I think my all time favorite is Silent Hill