Amnesia: The Dark Descent (PC, 2010)

Very rarely does a video game so effortlessly transcend the screen and pierce directly into your soul.  Amnesia: The Dark Descent (2010) is a horror game, and the finest example of the genre I have seen to date.  Other contemporary horror games fail to arouse genuine fear in the player because they do not understand what makes true horror.  A good example of this is Dead Space, where you are well-armed against the admittedly grotesque, but not at all frightening monsters aboard an interstellar vessel.  The game offers sufficient lighting to be able to see the monsters coming from anywhere, and they don't pose much of a threat because you can just vaporize them.
In the beginning of the game, you awake in a strange castle after having drunk a potion that has erased your memory.  You have amnesia (fair enough), the only thing you can remember is that your name is Daniel.  You discover a letter written by yourself, telling you that you must kill Alexander, the master of the castle, a twisted soul who is a renaissance man, machinist, and sadist.  You find later that the unfortunate people who suffered under him have been transformed into hideous monsters.
The pacing is excellent.  You begin in well-lit corridors, with a sense of foreboding permeating the air.  Daniel breathes heavy, his footsteps echoing in the hall.  Muffled, distant sounds make you dread each turn around a corner.  Occasionally, the whole castle rumbles, and Daniel cowers in fear.  A fleshy, pulsating web creeps through every pore in the stone.  As you go on, he will regain his ability and bravery, but you may not.  You pick up new pieces of information about the history of the Castle Brennenburg, increasingly unsettling accounts of workers locked in the wine cellar, tortured prisoners, and possessed guests.  It becomes apparent that Alexander is a genius, as well as a monster.
Amnesia has set a new standard for horror games.  The game is played in first person, and focuses on puzzle solving and survival.  Your means for seeing in the dark are tinderboxes, which can be used to light any candle, torch, or lamp, and your lantern, which requires oil to light.  Run out of either, and you will find yourself going mad in the darkness.  Quite literally, because the longer you stay in the dark, the lower your sanity gets.  Losing sanity will make your vision blurry and distorted, controls slippery, and makes it easier for monsters to spot you.  You can regain sanity by making progress.
Monsters in the game are grotesque, but that alone is not enough for true horror.  The game keeps them frightening by expertly using suspense.  There are no cheap jump-scares in this game.  You carefully look around every dark corner in a dungeon, and are relieved when you come to a room where you can shut the door behind you.  After collecting any supplies you can find, you return to the door, only to hear the heart-stopping roar of a monster, and you see it breaking down the door.  You have no means of fighting back, so what can you do?  You must hide.  Crouch down into the darkness behind some boxes, and make sure not to look directly at the monster.  It will eventually go elsewhere to continue its search for you.  You never see monsters clearly, and if you do get a good look at them, it is because they are separating your head from your neck.
Consider the scene in the cellar.  You enter the room and reluctantly inch forward.  Suddenly the lights black out, and when your vision returns, you are knee-deep in water, and suddenly you hear the splashing of footsteps barreling toward you.  You climb up onto the nearest box, and the splashes pass you by to reveal that you are being pursued by an invisible monster.  Only by staying out of the water will you be safe.  Easier said than done, since there are many places where you cannot simply jump from box to box.  You must be smart to survive.  By tossing objects in the water, you can divert the monster's attention, and you can move boxes in the water.  Once you get through that room, you are in a stagnant hallway, where the beast is constantly in close pursuit, but this time, all you can do is run, hopelessly searching for an exit.
This is the perfect horror game, and I can see already that it is having a powerful influence on coming games in the genre.  Steam has just started a green-light section, where you can vote for the games you want to see released there, and when I look at the independent survival horror games, I can see the influence that Amnesia has on most of them.  One seemed to have obviously taken notes while playing Amnesia, and followed them verbatim.  If it means more horror games that capture true horror, I'm all for it.  The only other horror game I've played that matches the feeling of Amnesia, and that is Silent Hill 2.  Both games have excellent atmosphere and pacing, and both feature a terrifying psychological story.  I'll talk more about that game at another time.