Actually inflicting fear through horror games is only possible if you don't have enough media exposure, which is 99% of the reason why only kids get scared in most games nowadays. A key element of horror is suspense of the idea that whatever lurks in the shadows actually has the capacity to hurt you, the actual human being controlling the player, and that you must either avoid it or brave it. In most cases, you're "hurt" from your fear of fear itself, sometimes of the unknown, sometimes from the fear that the creatures you will see are genuinely able of scarring your mind and exhausting your cognitive capacity. This last one is the greatest reason why creepypastas actually grasped your minds in your youth so well, you're not just scared of shit, you're there, and now you know about them, and now you're a target.
The reason media exposure matters so much is that, at the end of the day, your mind starts discerning too well what is real and what isn't, and eventually you internalize that whatever you feared in media is just... not real. You, as a person, are as safe as safe can be at all times, and then the horror is entirely gone. Maybe you can feel disgust, or despise whatever you're seeing, but the magic of horror, the thrill of adrenaline and pressure, is gone forever. Usually this took a long time to set in because we weren't exposed to so much media, but as time goes on, we see more and more media earlier in our lives and thus horror dies out faster and faster, to the point it has to become the cheap screamers that you see.
Hence, there's no saving the horror genre. It will forever be a pale version of whatever we had in the past, forever resigned to just be a theme or a coat of paint we apply selectively to our media as artistic expression, but never again to actually spook someone. Not through it's own fault (although the myriad of screamer cheap horror games didn't help it at all), but due to the fact that we're too exposed to different things now.