I have mixed opinions. While I won't deny that what Jim says has a lot of truth to it, I think part of the issue is that Horror games are making a come back, but they tend to be fairly difficult to design, and as a result despite the genius of certain games that helped get the ball rolling in the genera again, a lot of crap is being produced. To be honest games generally don't *DO* real horror, they just recycle tropes for the most part, as horror is by definition and uncomfortable experience, and only something comparatively few people can appreciate and seek out, for the most part most so called "horror fans" will attack things like torture, rape, graphic violence, "insensitive" depictions of people and religions, and all kinds of other things. Rather than being able to enjoy having their buttons pushed and being taken seriously outside of their usual comfort zone, they tend to get upset when someone REALLY scares them, creeps them out, or makes them uncomfortable, all the while denying what actually happened. As a result most "horror" tends to recycle the same kinds of generically creepy environments, jump scares, and possible implications, and generally comes across like the same kind of low grade kitsch you see in a Halloween spook house. That kind of thing can still be good when done well, but it's very hard to do those things well when you know what's coming, which is a big problem with real world spook houses as well as video games that are kind of following in their footsteps. The use of internet celebrities "hamming it up" is not surprising, as those kinds of ridiculous reactions being faked and/or recorded is how spook houses advertise themselves as well.
To put things into a certain perspective, look at say "Silent Hill". The game series succeeded because it was willing to push the envelope at first and took a somewhat irreverent attitude towards freaking people out. The problem was when "Silent Hill 2" came around the stuff they did in the first game got attention, and furthermore the audience who had seen the first game had become jaded and of course needed even more intense content to get the same effect. While "Silent Hill 2" itself went on to become a classic, it was edited heavily due to complaints about the bludgeoning of evil knife wielding undead children and such, which was removed from the game after appearing in the first one and earth SH2 demos. "SH2" succeeded post edit because of the strength of the story, but after that point the series was dialing it in as it was largely re-treading the same material deemed "safe" and no longer pushing the envelope as horror needs to. The series lingered on, but has generally been one comparative failure after another.... this is a series that has generally commanded a decent budget and can at least turn out a cool monster, and do the deserted buildings and eerie atmosphere at a top notch level. A game recycling these kinds of tropes and trying to be scary while being inoffensive (kind of contradictory) that doesn't even have that is of course going to be outright crap.
To put things into even more perspective, let's look at one of the generally more successful horror games of the current batch... Outlast. Outlast worked because it didn't give much of a crap about who it offended. You had dudes running around with their junk hanging out, being immolated on cruicifixian devices, and perhaps most impressively the creepy way how mental patients would shamble around "doing their thing" and beating themselves slowly to death slamming their heads into walls or whatever. Those kinds of details were all kinds of messed up, but are just begging for attention when someone goes after the game for being insensitive about the mentally ill, and playing up the worst stereotypes about them, no matter what kind of in game justification is presented. Sort of like how the context didn't really affect the complaints about the child-stomping in "Silent Hill 2", "Outlast" getting by, largely because it hasn't been so successful to get the same kind of attention, and as a result a sequel at least has the potential to be even more freaky than the original by raising the intensity as a horror series needs to. That said most developers don't have the talent to make things look as cool, or the guts to even try and go there, hence the reliance on tired tropes, and jump scares, with them going throught the motions like a cut rate spook house.
I'll also say that while controversial, I think a bit part of the problem is simply quality control and STEAM allowing anyone to crap out anything with a basic building engine and put it on their service (though I can see why it does this with Souce specifically). I think a big part of this is that your looking at horror games that would have at one time been a labor of love, and put up on the internet for free, with the devs virtually begging people to play it so their work could be appreciated. Nowadays anything anyone puts a halfway decent effort into has a price tag attached and starts glutting services like STEAM. Look back at some of the horror mods/games that helped push the horror trend, things like the SCP games, containment breach, and that stairwell thing based on SCP files from the SCP site. Fairly low quality, but high concept works that caught on and became sort of cult classics, but did so in part because they were free and something that people did just to be cool, not because it was intended as a serious product. The source/half-life mod/adventure "Cry For Fear" is another very similar example (though one which did spawn a higher quality, paid, re-build if I remember... though I could be wrong). This stuff was cool in part because of the ideas and that they were done for fun, not sold as a product, a lot of the garbage being critiqued here is mostly bad because it's being presented as a product that people are expected to pay real money for, not something done by a bunch of fanboys with time on their hands and wanting to entertain/amuse people.
I guess the short version is I think a lot of this stuff is just objectively crap, I don't think the low-end developers that do this kind of thing are all trying to bait famous let's players. It doubtlessly does happen, and I think Jim is right that it is a problem, but I don't think it's as frequently pre-meditated as he puts forward.
The problem with horror games in particular is going to be a lack of guts and people being unwilling to go into the right territory without trying to get needlessly artsy by was of justifying it. Of course in some cases, lack of ability is also likely a factor. Basically an unwillingness to risk offending people and getting backlash means a horror game is likely to blow chips. As a general rule if your concerned about being "offensive towards the mentally ill and those who champion them" your not going to be able to turn out a freaky Asylum game. Simply expecting reality to carry something like that isn't going to work when the basic facts have been re-treaded so heavily already throughout the genera. Likewise when dealing with evil cults, witches, etc... or whatever else, the idea is to shock and offend, if your concerned about offending new agers, your also going to fail. Horror is by definition scary and offensive. If someone had decided to be sympathetic to the realities of the poor and rural south "Texas Chansaw Massacre" would have been an episode of "King Of The Hill".... and going half way with it would have just been lame and turned it from a classic ino the cinematic equivalent of one of these games. Of course at the same time, it was relatively new at the time, so it didn't have to push too hard, at that point simply meathooking someone was enough, now that people have seen that, the ante has to be raised to get the same kind of shocked reaction especially from genera fans.
