In the Mouth of Madness
This and The Thing are why John Carpenter is my favorite horror director. He has perfectly captured the atmosphere, the style, the scares--the *everything* from Lovecraft's shorter stories and put it perfectly into film. But Madness has an original story, simply inspired by Lovecraft. An insurance agent detects frauds, and is good at it, and is assigned through a series of unlucky events to find a multi billion dollar horror writer that goes missing in the fictional Hobbs End. He travels there with a female from the writing agency and must find the writer. But what happens when fiction becomes reality, when whatever the writer pens down becomes real?
You get an interesting story and, more effectively, some of Carpenter's creepiest scenes and easily some of the creepiest scenes in horror. This movie flew under the radar but has amassed a cult following, and it deserves its fanbase. It is a very subtle, very smart horror movie that works at you slowly. A painting slowly becoming more and more grotesque each time its on the corner of the screen ,eventually becoming a cosmic horror when originally was a painting of a couple at a lake. Or driving in the dead of night and passing by a young boy on a bike going away from hobbs end. After a flash, he's driving towards you again, but he's 80 years old.
If you know lovecraft, or carpenter, at all you'll know you're in for a great ride. Sam Neil is fantastic in this. The scares are great and some of Carpenter's best. It really plays on insanity, alternate reality and cosmic horror. The mutant cop scene, the "transformation", the scene with Ms. Pickmen getting revenge... This movie is just excellent.
What makes it work is its smarts, as said. It knows the source material and plays like it. Its a thinker's horror movie through and through.