For as great as Alan Wake's American Nightmare starts out, it ends in an unsatisfying, cliffhanger fashion. I loved the setting, loved the action, but felt Remedy didn't tell their story to the best of their abilities; confounding story twists, half-ideas and a quick resolution hold this game back from making an impact.
The game is set two years after the events of Alan Wake and the titular character finds himself in an episode of "Night Springs," the Twilight Zone, Outer Limits-esque TV show that Alan Wake was a script write for at one point. In this episode, set in an Arizona desert, Wake finds himself hunting down his evil doppelganger Mr. Scratch as he terrorizes, murders and causes general mayhem. The Route 66 Americana feel of some of the settings in the game is inspired and is worlds away from the Pacific Northwest setting of the first game, but equally as mysterious and insidious.
Alan Wake's American Nightmare refines the previous game's gameplay and has a great premise, but falls a bit short on what I expect out of an Alan Wake story. Without spoiling too much of the story for players, this is the Majora's Mask of the Alan Wake universe; meaning you'll have multiple visits to the same locations as you try to figure out the correct actions to resolve your issue and face down Mr. Scratch. It was all very fun the first time through the game's three settings, but I was worn down by the repeated visits to the same locations. I did love how Remedy fully acknowledged possible player fatigue by not making you do the exact same thing each time around; they provided enough short cuts to keep the action moving, but, unfortunately, it didn't remove the entire feeling of “been there, done that.” By the end of the game, I felt the payoff and resolution weren't substantial enough to overcome the feeling that I had repeatedly done the same thing for the last five or six hours.

"Spiders. Why'd it have to be spiders?" - Alan Wake
If you've played Alan Wake before, you know what to expect from the action. Taken, the shadowy beings that are human, yet not, try to stop Alan from his mission. Through the power of light and a trusty flashlight, Alan can dispel the darkness around the Taken and gun them down. The action this time around is fine-tuned and smoothed out, familiar from Alan Wake, but improved. Combat feels tighter than the first game, the camera is a bit snappier and I felt fear from the enemy without feeling at a technical disadvantage.
Also improved this time around is Alan Wake's collectible game. Unlike the non-functional collectible coffee thermoses of the last game, you have to collect pages from his manuscript this time through, which directly benefit the player both in a fleshed out story, but also in terms of Wake's power to take down foes. The more pages you're able to track down, the greater firepower you can wield. In the previous game, I obsessively collected thermoses for the first half of the game, but gave up when I didn't see any sort of payoff. In Alan Wake's American Nightmare, my scavenging paid off because I picked up some seriously nasty guns that really helped in the game's home stretch.
Alan Wake is no longer the completely whiny character from his first outing; he's grown, addressed some of his glaring character flaws and is quite forward in admitting he has tried to overcome his flaws as a person. I enjoyed Alan uncovering his past through the manuscript pages and discussing his meteoric success as a writer and his depraved failings as a man and a husband. I really want to see where Alan Wake goes as a character in future installments and, with how this game ends, you can be assured there will be future installments.
The game does suffer from a few technical issues. If you get too close to the characters or parts of the environment, you'll see some ugly textures and shading. I'm not sure what the heck is up with some of characters' hair, as some hairdos look great while others look downright ugly. In addition, if you find yourself moving your camera often to get the best look at characters during conversations and cutscenes, you might want to take your hand off the right camera stick for a bit. American Nightmare suffers from frequent screen tearing, which marred some of the conversation sequences. I found it best to leave the camera stick alone and was eventually able to forget about the issue.

The Olsen twins are difficult and disturbing enemies.
After you beat the story mode, do yourself a favor and check out the excellent “Fight 'Til Dawn” Arcade Mode, because it's a big standout and a great new addition to the franchise. In Arcade Mode, there are no rules, except that you need to survive 10 minutes... until night passes and your enemies are destroyed by the rising sun. American Nightmare manages to take the tried and true “waves of enemies” horde mode and make it interesting through resource management and loads of close calls with Taken. It's a tense mode that demands a player's attention. I'm glad that it's not a two player mode and instead tasks a single player with surviving; playing with a second player over Xbox Live would have reduced the fear and just made it a buddy co-op shooter. The way it's presented in the game is pitch perfect horror and fear combined.
Remedy almost nails it with Alan Wake's American Nightmare. They took the foundation of Alan Wake, expanded the concept and really got the mechanics down pat, but they just couldn't deliver on the story front. Regardless, I believe this isn't the last we'll see of Alan Wake and there are plenty more (and hopefully better) stories to tell.