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Before the release of the fifth Nightmare film, the series underwent remarkable metamorphoses: an interesting part was followed by an incomprehensible and boring film. However, the fourth film earned the most money at the North American box office, which was more than a compelling argument for the producers to give the green light to shoot another sequel.
The third, fourth, and fifth parts can be viewed as a kind of trilogy within the series, united by a common storyline and characters. In each subsequent film, almost all the main characters from the previous film died, and new, initially secondary characters entered the arena. This time, the entire plot revolves around Alice and her unborn son.
In each sequel, the creators had to somehow resurrect Freddy, who had temporarily passed away: some explained nothing and presented viewers with a fait accompli, while others tried to come up with some kind of excuse. The idea of Freddy returning through the dreams of an unborn child is quite original, unless you apply logic: if Freddy can enter the dreams of one person and, moreover, use them to enter the dreams of other people, why would he bother coming up with such a cunning plan? On the other hand, when watching teen horror, it's better not to use logic, but rather to turn it off completely, so you can ignore the previous statement.
The writers decided to develop the storyline that began in the third part but was forgotten in the fourth: the birth of Freddy and the fate of his mother, Amanda Krueger. But if in the previous films it was possible to find a common storyline about Freddy, it is from the fifth part that the real mess begins: now Freddy has been a spawn of hell since birth. This is completely unnecessary: you cannot radically change the mythology of the franchise, you can supplement and develop it, but you cannot change its origins.
If you ignore the plot and focus on the murder scenes, it's worth acknowledging that they have become even more twisted and witty. The cruelty and violence on screen may have exceeded all acceptable limits (for its time, of course), but the producers intervened and cut the film thoroughly.
In terms of quality, there have been no improvements since the fourth installment (perhaps even the opposite). The series clearly entered a “only for die-hard fans” phase and could have been safely canceled, as there was a suitable ending, but the producers' greed knew no bounds, and just two years later, what seemed at the time to be “The Final Nightmare” was released...