So, I stumbled across this guy's blog, where he gives reasons why the horror genre is "dying":
Well, pardon me for being skeptical, but I've been to this funeral before. Horror is always around, but the quality is always in flux. People seem to forget that, during any given point in history, there are always some true classics of the genre...and a whole lot of complete garbage.
Going back to horrors "golden age" of the Univeral Monsters, you had the classics like Frankenstein, Dracula, Wolf-Man, etc, all dominating the box office. In time, numerous sequels and "versus" pictures became the way for Hollywood to milk these franchises for every last drop. Eventually these series became a joke, with the classic monsters showing up in comedies with Abbot & Costello. The cry at the time? "Horror is dying"!
In the 1950s and 60s, irradiated monsters, space-men and vengeful creatures from times past arose on the silver screen, and horror started to thrive once more. Hitchcock created the prototype for the slasher with Psycho, and audiences started to flock to theaters. Of course, as time went on the irradiated monsters became more and more ludicrous, the space-men silly, and the creatures more obviously men in rubber suits. These films became punch-lines and gags, with gimmicks like 3-D and "Smell-O-Vision" becoming more important than the actual plot of the films themselves. Of course, most people thought "horror is dying"!
In the 1970s and 80s, we had the drive-in circuit, which were mainly films with low budgets and minimal studio backing (these films were also the backbone of the "grindhouses" of this era). These played in their theaters, sometimes for months on end, garnering cult audiences from word-of-mouth. Most were never huge sellers, but they were able to make a profit over time. (it should be noted that the midnight movie circuit was also a huge factor, giving new life to films like Eraserhead, Phantom of the Paradise and The Rocky Horror Picture Show that had previously flopped at the box office). Horror movies like The Exorcist and Halloween were able to dominate at the box-office, but the majority of the greats from the 70s were those films that found their audience at the drive-in.
As the home video and cable markets expanded, the drive-ins and grindhouses dried up. Eventually, you had a new market with "direct to video" films. While the majority of these were piss-poor, you'd still get the occasional gem that just didn't get its day in the theater. Hollywood has always chased big hits, and often won't take a chance on a film that isn't a "sure thing". With the drive-ins & grindhouses, the studios had an outlet for those films they were unsure of, putting them out in the hopes that they would find some sort of audience. Home video rentals made this redundant, so soon the shakier stuff was sent directly to video. Unfortunately, the increased visibility of videos soon led to these films getting a reputation for being cheap, crappy flicks that weren't good enough to make it in a theater. While this was often true, it really wasn't any different from the grindhouse days. Plenty of those films were crap, but the bad stuff was often overshadowed by cool, edgy flicks like Texas Chainsaw Massacre and The Evil Dead. So, now you have lots of bad movies clogging the video aisles, particularly in the horror section. What is the reaction? "Horror is dying"! Of course, this is the era that gave us Friday the 13th, A Nightmare on Elm St, Hellraiser, Poltergeist, etc. While all those films had silly sequels, there is no denying that the originals were classics who made their mark on popular culture.
Of course, you get to the 1990s and 2000s, and you have a rash of remakes, self-aware parodies (the Scream series) and Japanese adaptations. Many of these are quite good, but the majority are awful. Studios now want to maximize their profits, so the marketing geniuses give us PG-13 fair, while later offering up "unrated director's cut" DVDs later on to purists. Is this causing the "death" of horror? I'd say it's just another typical bump in the road for the genre. The "torture porn" sub-genre is already beginning to wane, and there are still films that are hitting the scene that generate a buzz, like The Strangers, Drag Me To Hell, Let the Right One In and the upcoming Trick 'r Treat (which is getting the straight to DVD treatment, even though it has been hailed as a modern horror classic by most critics).
So no, horror isn't dead. It isn't even really dying. It is lying there, waiting for you to get too close so it can reach up and grab you when you least expect it. You may THINK it's dead, but that is never a good thing to assume when it comes to horror movies!