Director James Wan and writer Leigh Whannell return to the spooky fun house with 'Insidious Chapter 2,' marking Wan's second horror film release in as many months after this summer's surprise hit 'The Conjuring.' Unfortunately, the sequel gives diminishing returns as the scares are dialed down and the laughs (intentional and unintentional) are cranked way up.

The film picks up right where 'Insidious' left off, as Josh (Patrick Wilson) has been possessed by the evil old woman spirit that haunted him as a child, and his wife Renai and their children must once again contend with the evil forces that be.

One of many glaring problems with the film is introduced at the outset, as we visit Josh as a child (with Jocelin Donahue playing a younger version of Barbara Hershey; an inspired casting decision). 'Insidious Chapter 2' makes it clear from the get-go that this isn't a new story with new ghosts, but rather a long-winded explanation of why Josh has been haunted his whole life and who that nasty old woman ghost really is. And the ret-con, in theory, isn't so horrible, as the story behind the ghost is sort of interesting ('Mommie Dearest' meets 'Psycho'), but better suited for an episode of something like 'American Horror Story.'

The biggest issue with 'Insidious' was the third act, which took a spooky, atmospheric haunted house story and turned it into a gimmicky haunted house theme park attraction. 'Insidious Chapter 2' takes the third act of its predecessor and expands it over 105 minutes (which admittedly feels rather breezy), with the ghost hunters (Angus Sampson and Whannell) given a much larger role thanks to the death of their leader, the psychic Elise (Lin Shaye). But, Shaye's Elise was the best part of that trio, and her absence is immediately painful, with the bumbling ghost-hunting duo ineptly trying to help Renai and her family find some peace. The pair call upon another ghost psychic friend, Elise's former colleague Carl, who is equally inept and uses a tumbler of dice to communicate with the dead.

Of course, Elise isn't really gone because "the further" (the astral plane) is once again a key element to the climax of the film, which brings another layer of issues -- mostly an incredibly maudlin, TV movie of the week vibe. The film pays homage to classic horror films like 'The Amityville Horror' and 'The Shining,' with Josh possessed and turning on his family, and while the rest of the film flounders around him, Wilson fully commits to his wonderfully sinister performance.

'Insidious Chapter 2' feels incredibly rushed, and likely was, given that Wan was also directing 'The Conjuring,' which hit theaters in July and instantly became one of the most successful horror movie releases of all time. It's clear where Wan really focused his efforts between the two films, and it seems that 'The Conjuring' further benefited from a script that wasn't written by Whannell, who also wrote 'Saw' and 'Dead Silence' for Wan. Of all of the problems with 'Insidious Chapter 2,' the script is probably the biggest offender, providing us with lines like, "So that's what happened there" (spoken twice, with minor variation) and undercutting every scare with over-expository, redundant, and boneheaded dialogue. There are scarce genuine laughs -- most of the comedy is of the seemingly unintentional variety.

Wan is one of the few filmmakers trying to actually scare audiences with his horror movies, but 'Insidious Chapter 2' is a tragic misstep. What worked in the first two-thirds of 'Insidious' (and in the much more effective 'The Conjuring') were the moments where Wan worked to build dread, expertly crafting atmosphere and earning every scare. Jump-scares are such a cheap gimmick, but Wan knows how to play with them and milk every moment leading up to the reveal; less is often more. But 'Insidious Chapter 2' is nothing but more, more, more, and Wan spends very little time with dread and more time with unnecessary and convoluted mythology (involving some head-scratching gender issues), allowing a sub-standard script to overtake his visual style -- a visual style that is already limited by an obviously tight budget and shooting schedule, making the film look incredibly cheap.

It's unfortunate that the director who gave us one of the best horror films of the year with 'The Conjuring' is the same guy delivering the terribly underwhelming 'Insidious Chapter 2' less than two months later. The scariest thing about this sequel is just how disappointing it is.