Many flaws to your idea. I will post 5 because I'm lazy just as you guys are.
1. Horror is completely taken away once you make it multiplayer. Oh hey, look a bunch of scary guys, don't worry I have 10 friends with shot guns that are able to take on over a hundred.
2. Who is really afraid of Dark Souls? I mean really, most of the bosses have a cut scene of them creeping into the arena, and very very very rarely a mob will pop out and ambush you.
3. The game companies would most likely reject the idea. The only company out of the five that would have any interest in doing it is EA who published Dead Space, and that is only to squeeze money out of the franchise.
4. This one is just out of spite, but you rank The Walking Dead as #5 because "simply my bias towards zombies." but hang on, let me post three more games that incorporate the undead in a manner. Resident Evil, zombies. Dark Souls, every thing that is relative to a human is an undead (zombie). Dead Space (your #1) is practically zombies just in a more messed up form.
5. Your concepts are terrible. You merely just take the idea from mainstream mmo's (dungeons and quests) and place them into a new world. Yes the perfect horror MMO. Honestly this is like an idea brought up by 10 year olds who are fantasizing of how awesome it would to play a MMO everything.
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