So I'm a big fan of survival horror games, and I've noticed that in recent years there's been the implementation in some of a 'Sanity meter', which gauges the level of stress the player is under based on certain scripted interactions player actions. These tend to do things such as apply filters to the screen, make strange things happen. These were most notably used in the games Eternal Darkness and Call of Cthulu: Dark Corners of the Earth. Neither, in my view, really did what they could have with the mechanic.
Eternal Darkness implemented very strange gameplay effects such as screens instructing you to reset your console, simulating the muting of the television, and your character spontaneously exploding. Whilst these were certainly creative, they were often unintentionally ridiculous or funny, and actively reduced immersion by reminding the player they were engaged in a video game.
Call of Chtulu on the other hand, chose to use sanity effects to improve atmosphere and tension, giving an audible heartbeat and breathing, visual blurring and shaking, and distortion to give a sense of dizziness. Whilst I am more in favour of this kind of mechanic, I feel they could have gone much further and expanded upon the sanity concept, given especially that sanity (or eventual lack of it) is a key element in Lovecraftian storytelling.
Another problem is that the game is actively telling the player 'You are going mad.' This second person narration is not exactly immersive, and it would be far more effective for the player to begin questioning what they are seeing on their own, rather than being directly told something is wrong.
Okay, so enough with what's wrong with the current usage, and onto how I feel it could be improved.
Firstly, there should never be a direct representation of player sanity in the game, so an actual gauge showing your level of sanity is totally out of the question. I would also rename the mechanic, referring it to as a Stress Level. This could have varying levels and ways of increasing or reducing it. Just so we've got some context to work with.
Stress Level 0- No effect on gameplay or atmosphere, everything is about as normal as it can get for a horror game.
Stress Level 1- Player character is agitated. More haunting ambient sounds and variance in volume of sounds. Audible heart beat and breathing.
Stress Level 2- Player character is distressed. More persistent stress effects, variances in brightness and lighting for areas. Enemies look more threatening or become larger. Very slight overall visual distortion.
Stress Level 3-Player character is terrified. Basically everything from previous levels but introduction of hallucination effects also, as described below.
Now, Levels 0-2 are similar to what we've seen before, and Eternal Darkness attempted hallucinations with extremely mixed results. However, we never want to tell the player that there is a change in sanity, so everything is presented as though that is supposed to be that way. Hallucinations should also not be telegraphed. Walking into a room and seeing that you're walking on the ceiling is not scary, it's comical. Walking into a room you'd previously considered safe and seeing it filled with enemies is scary. What if you killed them and then after the fight was over you realised they had been innocents who looked like enemies? Regret, confusion, general questioning of what is presented to them.
It is essential that this is never telegraphed to the player, and that they actively question what is real rather than any clear differentiation being made. This allows the player's imagination to do much of the legwork, and as we know things are always scarier when you don't understand them, so the player must be provided with as little information regarding this as possible in order to maximise the experience, perhaps even intentionally misleading them if it will improve the overall game experience and immersion level.
Overall this is my idea for how the 'Sanity Meter' system could be improved. Some other ideas for mechanics following the hallucination theme.
The game could play sounds that indicate enemies to be present in times of stress, causing them to look around and try to find these nonexistent foes. Alternatively the player could see a large number of secretly fictional enemies surrounding the PC, then when they attempt to attack them they vanish, causing the player to waste ammo.
A complex puzzle may become near impossible when the character is sufficiently stressed, important images become rearranged and replaced by irrelevant visuals. Numbers on a keypad keep moving and changing their meaning. Words typed in may appear to be incorrect and make it seem as through the player is typing in sinister phrases to throw them off.
That didn't just happen
A player may enter a room and instantly be killed by a powerful enemy, before gameplay resumes at the point just before the PC entered the room. The PC may walk through a door and appear in the room they just left.
The enemies or threats in the game may begin to look even more terrifying and take on symbolic forms relevant to the PC.