Alan Wake's American Nightmare is a follow-up to 2010's Alan Wake. Taking place two years after the first game, protagonist Alan Wake has been away from his wife since the events at Cauldron Lake in Washington, and has been presumably on a continued battle against the Taken and Wake's dark half double, Mr. Scratch. While more of the backstory of Alan Wake is revealed in this title (such as information on what he did before he was a famous novelist), the primary focus is a skirmish based around an old Night Springs episode (Alan Wake's version of The Twilight Zone) in the Arizona desert. Alan Wake's nemesis, Mr. Scratch, again fills the role of the antagonist.
Whereas the first game was heavily focused on story and a survival horror atmosphere, this title is more focused on action with story elements taking a secondary role. Story-driven elements such as finding pages of manuscript in the levels and Alan needing to use his abilities to "rewrite" reality are maintained. However, unlike the first game where ammunition was often scarce and players were focused on survival, here, ammunition and weapons are generally plentiful and there is stronger emphasis on fighting and defeating the Taken. The game is built around three areas, a highway motel, an observatory, and a drive-in theater. The large driving segments of the previous title have been removed and the game takes place entirely at night in separate levels.
New to this title is an Arcade mode where the player must face off against several waves of increasing numbers of enemies. While there are streetlights (for health and protection) and supply points in the stages, they take some time to recharge after use and therefore require a bit of strategy on the part of the player. Other weapons, flares, and ammunition lie scattered about the arenas. Stages consist of a variety of designs, many of which do not appear in the regular story of the game. The basic premise of the Arcade mode is simply to "fight till dawn" when the Taken lose all of their powers in the light. Stages last ten minutes and as with any arcade-focused title, building a high score is the other primary goal (besides surviving). Players build a score multiplier by successfully dodging attacks and killing Taken. The multiplier gradually drops when nothing is being killed or dodged, and it resets if Alan Wake is struck by an enemy.