Ai-chan's most favourite horror games happens to be Fatal Frame 2: Crimson Butterflies and Corpse Party. They're of different genres, but they both work on the psychological instead of the metaphysical.
In Crimson Butterflies, you are constantly alone, with only a camera to protect you as your look for your twin sister in the haunted village. As you continue the journey, you slowly learn of the village's history of sacrificing twins to the god of the pit. Well guess what, you are a pair of twins, so it becomes personal now. Throughout the journey you constantly have to go through puzzles that make you think, ghosts that make you scream and mysteries that make you say, "Ah, so that's what happened." You'd constantly be screaming, "No no, go away, go away" throughout the night as the only way to exorcise ghosts are through the closeup when you focus your camera on them, looking at them through a small camera knowing that if you miss the snap, that's another swipe from the ghost and that's fucking scary.
Corpse Party is a game made on RPG maker. Despite that, it's still one of the scariest games even to this day. The contents of the entire game is a mystery and the journey even more so. Even despite having the walkthrough, you still get scared off by the demons and ghosts that constantly haunt you. And the endings, oh god the endings.
Ai-chan tried to make a horror game similar to Corpse Party some years ago, but some dudes that Ai-chan invited to provide added content complete changed the game when Ai-chan was away for a month. Instead of an Asian horror game, he wanted to make an Amnesia copy with American style of horror movies. What this means is, he changed everything into "unseen horrors, shock moments and a lot of swinging weapons".
Ai-chan was really angry by that. Asian horror is completely different. Asian horror works on the psychological, not on the unseen. In every Asian horror movie, you can clearly see the ghosts, and yet horrified by it. Why? Because we know it's a movie. We psychologically know it's fake. Therefore, we need more confirmation that it is a horror movie. By not letting the ghosts appear, we have been reduced to wondering what kind of movie this is. For example, the sounds that the kid in Ju On make as he crawls down the staircase is way scarier than a girl acting to look scared in a western movie where the ghosts are not shown.
We know it's all fake, so think from the viewers perspective. Shed away the philosophy of 'fear the unknown' because making others fear what's in your head is not going to work. People need to know what they're supposed to be afraidof.