I walked out of the theater numb, and was unable to go near a dark wooded area for weeks afterward. Certain sounds from the movie kept replaying themselves in my head, and even watching television shows or commercials that featured shaky hand-held video evoked that perfect dread. Needless to say, it was one of the most effective horror experiences I've ever had.
I have yet to see a video game affect me the same way.
Silent Hill, with its cold sweat-inducing radio static, and use of cramped spaces made me somewhat jumpy while playing. Sierra's Phantasmagoria had a great atmosphere, with every actor and setting giving off a feeling of having been rotated just a few degrees askew from normal. Cosmology of Kyoto's sheer culture shock and weirdness certainly touched some deep chords. But none of these games left me with that nearly indefinable feeling of having experienced true horror, the kind that calls into question your perceptions and expectations of what it means to truly be alive, and how tenuous your existence might be.
In fact, what these games trade on is their ability to startle, not scare. It's a simple thing to let the player wander around a quietly disarming landscape, then suddenly attack them with a grotesque monster, to get a fight-or-flight response. This might last for a while, making the player jerk in his seat and get adrenalin shooting through his system, but it's nearly impossible to sustain this effect over the course of an entire game. Sudden starts and repugnance go hand-in-hand for games like Clive Barker's Jericho, Dead Space, and Doom 3, but they're a far cry from the lasting impact of true horror.
The Blair Witch Project, the reigning king of horror to my mind was The Silence of the Lambs. Before that, it was Jacob's Ladder. Before that, Angel Heart. Being a writer, it's important to me to be able to define phenomena like joy, anguish, and fear, in a better attempt to understand how they work, and how to evoke their effects in a reader. Dissecting the aforementioned movies, it's clear that the defining elements between them, and indeed of any effective horror film, are helplessness and the loss of control.
In The Blair Witch Project, the trio of protagonists become lost in a forest and quickly succumb to a set of phenomena that are herding them toward a gruesome finish. The Silence of the Lambs features two concurrently-running stories, both of which involve a dominant figure in complete control of another. Jacob's Ladder perfectly visualizes the despair of confusion and being at the mercy of forces beyond understanding. Angel Heart is a classic story of deferred punishment, and the conclusion is inevitable. Each of these movies strongly asserts its particular theme of helplessness, and their effects last for far longer than the running time of the show.
That, in a nutshell, is why true horror rarely exists in video games: the player is almost never truly helpless.