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Honestly, I think they're trying to replicate the success of that Korone horror game. A short but fun(ny) experience about a doggy cult leader.
But after seeing the Hololive Error demo so far, I can tell a flop when I see one. The game is very linear and all you can do is pick up are collectible notes. It's a glorified walking simulator. And Sora herself isn't scary either. She speaks like she normally does in her streams, which isn't threatening at all.
