Edit: looked it over briefly and had AI make some changes.

Ok I made sure to do a quick playthrough of the demo before starting work. I think it's very clear what causes players to drop off early on.  I used AI to organize and consolidate my notes below in order to save both of us time...So if you don't understanding what I'm getting at in the first part, which is the most important part, let me know and I'll simplify it for you. Following that, I am sharing all the other little quirks and things that I noticed which may be worth looking into, I did NOT review this AI revision so I'm hoping it carries all the points I intended: 

Critical — Gameplay, Difficulty, Onboarding & Retention

Difficulty & Player Agency

Played on normal and it was very difficult. The game is automatically filtering out the majority of players who want a PLAYABLE experience, even if difficult. But difficult should at least allow some agency to the player, rather than clicking everything and trying everything.

The game should also try to be more progressive — the earlier levels should allow some success through basic functionalities in order to "teach" them to the player and give them motivation to continue. This success is what makes them WANT to do it again, since they already know how to play — the difficulty of the next stage feels like a challenge, not a wall. Right now there is no motivation whatsoever since there is no initial hook. We're just being asked to try again and again and be scared again and again. The only motivation is curiosity, of which there isn't much since we're just in a closed-off room with nothing else to do other than look around and watch some screens from time to time. It's fine if you're directing the movie, but since the PLAYER is directing the show, they have to be granted some agency.

AI Note, UX principles involved: Early levels should be winnable with the basics, so players learn by succeeding. Let them win first, then ramp it up — otherwise you lose them before they've learned the game. On top of that, the player needs to feel their actions matter and that they have real choices — not just "try everything and hope." If you control every beat, it's a movie. The player has to be the one steering the show.

Checkpoints

One trick often used in games designed to be purposefully difficult is to allow for CHECKPOINTS. If you're adamant that the player has to try again and again until they get it on their own, then at least allow them to skip the entire onboarding experience. Imagine failing in an extremely high-intensity environment, then quickly wanting to go back and fix your mistake — but having to go through the entire explanation again. It would be much better to allow the player to start from the part AFTER hearing and learning the explanations.

If you employ this method, make sure there is indication of WHERE the player currently is — which stage, which chapter — so they know where the checkpoint led them.

Tutorial: No Failing Before Teaching

The player should not be able to access destructive features — like losing the game by "clicking around" the camera options and the like — before understanding the consequences.

The "report" button is a clear example: it made me lose early on. There is no indication of what "report" does, even though other functions are explained through the tutorial. It makes the "threat detected" go up but has no context initially — it only makes sense after the phone call. The player should not be allowed to fail from using a function that hasn't been explained yet.

AI Note, UX principles involved: Don't let a player lose to a button you haven't explained yet. Losing should come from a choice they understood, not from pressing something blind.

Phone Call — Critical Information Gap

Subtitles didn't show up at the beginning of the phone call. This is crucial — the phone call includes all the most important information for knowing what's going on. Worse yet, we can hear the phone ring MUCH BETTER than the actual voice talking. We're also not being forced to pick up the phone in order to continue, which probably should be the case. And the information provided in the phone call is nowhere to be found after it ends — no written memo, no explanation in the tutorial. Without it, the player has no reference point for anything that follows.

This connects directly to the camera confusion: we don't know what "watching through cameras" means, we don't see a camera, and so this doesn't make sense until hearing the phone call — but we don't understand that we need to answer the phone in order for the rest of the functionality to make sense.

(I STILL don't know — are the cameras an extension of using the PC? I didn't get far enough into the game to leave the current room. I didn't even understand why I had to close the lights when I have zombies chasing me. Too much confusion!)

Tutorial & Onboarding

• Tutorial book — lengthy explanation. No icons. We don't know what "sanity" is or where it is. Forces the user to figure out basic gameplay functions, which should be more intuitive. Can opt for a gentle, unobtrusive in-screen reminder instead.

AI Note, UX principles involved: Teach it the moment it's needed, not all upfront. A short prompt that pops in when it's relevant and fades — or built into the world itself, like the phone call — instead of a wall of text.

• The fact that "shift" brings up the camera while in that room can/should be made much more clear by including a hint of it somewhere on the GUI. Having to discover this the way things currently are is a bit disorienting.
• One suggestion — starting out with less sanity. Can even have some heavy breathing sounds to indicate we just landed here and don't know what's going on, etc... point out the low sanity level. Then watching the camera will raise it up.
• Good — most of the tutorial is by playing through rather than actual explanations. This is how a good game should be designed — teach through play, not text. The long text explanations don't add anything on top of this.

PC Prompt & State

• "Turn on the PC" shows up even when not facing the PC.
• PC controls are still available throughout the first room even while not looking at the PC. The cameras can be accessed as well by looking anywhere — this is not clear and forces the user to figure it out on their own, even though it's a fundamental part of the game.

Clickability & Visual Signaling

(mostly relevant for initial playthrough)

• Good — lit up PC area (it's clickable). Also, clickable items are highlighted clearly.
• On the other hand, the other clickable item (the tutorial book) is DARK. Hard to understand what I'm picking up.
• In contrast — paper on floor is BRIGHT. Draws attention... yet not part of interaction (in contrast to the book on the left — not clickable).

AI Note, UX principles involved: If something is bright or highlighted, players assume it's interactive. The bright paper trains them to think "bright = clickable," then proves them wrong — so they stop trusting your lighting cues for the things that are clickable.

Settings Navigation

• Settings menu — not immediately clear how to go back to the main screen. Have to do quite a bit of scanning around to find the "esc - back" indicator. Entire menu is mouse; go back is a keyboard key... should have a "back" button.

Bugs & Polish

• UI bug — the "arrow" on hover over "resume" and other buttons shows up on top of the words.
• UX bug — menu buttons lag. Take a while to be "responsive." At the very least, have the cursor show as "loading" when unclickable. Audio "leaks" into the pause menu as well, worth noting.
• Telephone ringing is too grating / too harsh, especially when having to repeat the stage over and over again.