I think my thing with Lights Out, from what I saw on the video at least, is they just made a dark house with flashlights and didn't bother to solve the one problem KSF still has -- theatricality with the scares.
Unfortunately a lot of the monsters don't have the restraint to pop out and do their one scare. But even more unfortunately, their mazes aren't designed in a manner that gives good hiding places, or even a lot of story -- half the time, the monsters are random to a room and don't fit the scene or even the environment or the maze at all -- just a generally scary looking thing.
Essentially, I feel KSF just designs a scary looking place and says "have at it." But there needs to be things in place that says, "THIS IS THE SCARE OF THE ROOM BECAUSE THE STORY RELIES ON IT." It's cool they get creative freedom, but not enough of them are professional enough to make this work consistently. And I think KSF needs to start thinking about the scare on a room by room basis back when they design the maze.
I've always said HHN should learn from KSF and vice-versa. While I prefer HHN's style, if they implemented more random scareactors into the mazes for those that miss the pop out scare, they'd be doubling their scare factor. And if KSF implemented more set-scares, they'd be doing better also. Whichever one of them figures this out first will be all the better for it.