Prototyping Lovecraftian Psychological Horror in a Video Game

Abstract

This thesis presents The Town That Sleeps, a solo Unreal Engine 5 psychological horrorprototype that treats fear as a sustained condition of interpretive instability rather than a sequence of threats, combat encounters, or jump scares. The current build is deliberately scoped to a condensed Plaza environment that supports repeated traversal and comparison, allowing small shifts in perception and environment to accumulate into unease. At the center of the prototype is a sanity system designed as a perceptual and interpretive variable rather than a punishment meter: sanity begins at 100, decreases within designated sanity volumes, and gradually recovers when the player exits them. This variable coordinates audiovisual and environmental feedback and conditions interaction, with the explicit design position that lower sanity should reveal more layers of the world, increasing interpretive burden rather than restricting navigation or withholding information. The written component situates the project within research on uncertainty-driven horror, cognitive burden, interface mediation, spatial instability, identity erosion, and the tension between player agency and character breakdown. The thesis documents the project’s design evolution from an initially expansive town concept to a focused prototype, and records implementation decisions made to preserve system stability and readability while supporting perceptual destabilization. Evaluation of the current build identifies a key limitation: the “more” revealed at low sanity is presently most legible at the presentation layer, and requires further cognitive and narrative consequence to avoid being read as mere impairment. The thesis concludes by outlining future directions that shift reveal into evidence and irreversible interpretive change, expand hallucinatory interaction, and reduce reliance on overlay-based UI through more embodied and diegetic feedback strategies.