Cutscenes can help accent a dramatic situation, but they inevitably take control away from the player. That's especially problematic in survival horror games, the very essence of which is (supposed to be) tension. You're supposed to feel vulnerable and fear for your well-being, which is usually accomplished through the "survival" aspect. And then the cutscenes break the tension because you know that whatever happens is beyond your control; you just passively watch it. And that's no good.
Continue reading for examples of how horror works in Silent Hill 2, and how the cutscenes contribute (or detract) from that horror.
Silent Hill 2 is a slow, brooding game that just layers the atmosphere on so thick that you almost suffocate from the tension. It doesn't resort to cheap scares for its horror, it goes for creepy, uncanny images and scenarios to get under your skin as you explore. Just walking around town is enough to put you on edge. It's all because of the simple gameplay mechanics, what you do to survive.
Your first [real] encounter with Pyramid Head is kind of distressing, but it happens in a cutscene. You walk into an apartment room to find him apparently raping two mannequins. Jimmy then runs into a closet and watches the scene with Pyramid Head staring towards the closet, slowly lumbering forward. Your cover may have been blown, and you're about to get destroyed by Pyramid Head. Panicked, Jimmy fires several rounds from his pistol, and Pyramid Head walks off.
As disturbing as it is to watch him raping grotesque, slightly effeminate monsters, the tension of being discovered and escaping with your life is basically nill because you're not in control. You're resigned to watching the cutscene, aware that things are going to happen a certain, predetermined way, and you can reasonably expect to come out of that cutscene alive and well. Because they just can't kill you during a cutscene. Or if they do, it's just one of those unavoidable plot elements.
Your first actual encounter with Pyramid Head actually comes a little bit before that, when you come to a barred-off hallway, with Pyramid Head standing 10 feet away on the other side. He doesn't move around, he doesn't make any noise. He just stands there. You look at him wondering "Is that who I think it is?" And then you feel uncomfortable, because he's so close, and he's watching you. Even though there's no interaction and nothing even happens, this moment is creepier and even more unsettling because you're in your own frame of mind; you don't know what's going to happen, but you'd better be ready in case something does.
Your next encounter with Pyramid Head has you trapped in a very small room with him. You go through a door, and there he is, raping another mannequin. You turn around but the door's locked. You're scared of this big, scary monstrosity because he's so weird and unnerving, and also because he's got a giant sword. As he lumbers around, you frantically check the exits, only to find you're stuck with him. You try to shoot him, but the bullets just bounce off his pyramid head. You start to panic because you're about to get special treatment from Mr Head himself and you don't know what to do.
I therefore contend that both of these moments, the ones where you remain in control of the situations, are more horrifying than the cutscene. Why is this? Because you're actually vulnerable during ordinary gameplay. You can take damage. You can use all of your ammo and healing items. You can die. You're in a frame of mind where anything can happen depending on what you do.
Cutscenes tend to just break the flow of the gameplay; you're going along, your head is in the game, and then the cutscene just rips the controls out of your hands and jars your perspective. You're suddenly in a different mindset, and no matter how dramatic or engaging the cutscene may be, it's still disrupted you a bit.
Resident Evil 4 put some quick-time events into its cutscenes. Scoff as you might at the dreaded QTEs, they at least added a certain level of interactivity necessary to create tension and dread. You defeat the lake monster and breathe a sigh of relief, only to have the anchor rope get caught on your leg and threaten to pull you under. You scramble for the controller and spam that stupid button because you don't want to die. It's a startling moment that becomes very tense because you're actually involved in the cutscene. (Sort of.)
Which just goes to show you that interactivity is crucial for maintaining tense horror, and that traditional cutscenes don't always cut it.