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Why do horror films fall apart in the final act? I think, for the same reason that many SF shows fall apart when then have a two-episode story: it's much easier to be interesting when you're winding up tension and mystery than when you're releasing it. If you want something like a conventional narrative resolution, you have to reveal the monster (see Stephen King - when you finally show the seven-foot bug, part of the viewer is saying "well, at least it wasn't a seventy-foot bug"), you have to have some suggestion that normality is being restored. Either the monster is beaten, or the protagonist is beaten - either way, it's the end of the exciting conflict.

If we don't care about the protagonists and in some way want to think that they could have an interesting ongoing story - a romance is one of the easiest ways to do this, but then the scriptwriter has to come up with two interesting characters - then all the resolution becomes anticlimax.

Why do horror films fall apart in the final act? I think I know why that happens. I tried my hand at storytelling and I ran into the same problem. I had a really great idea and it produced an inspired first act and a compelling second act but it all fell apart in the third act. I think the problem is that most of these horrors are built entirely around a single idea or conceit. A single Idea can only get you so far and it never has a proper resolution built into it. "What if your world was only a dream and you never realized it?" That is a great idea to start a story and develop a tale but how do you end that? What about a tale of a man who always believed what he was told and took the easy way out now learning to think for himself and be willing to pay the price of living independently? That is a separate but compatible idea and by weaving between the two you can get your final act.

You need multiple compatible ideas in your horror and scifi stories, especially if they are high concept stuff. That way you can shift between them to ramp up or ease the tension as well as inject new life when your main idea starts to run out of steam which normally happens somewhere around the Big Reveal. It is also a great way to distract the audience from the shows flaws by entertaining them with something else. That’s what happened in the Sixth Sense. There were so many compatible interesting ideas interwoven there that the audience was distracted from what should have been obvious and the other ideas were able to deliver the final act. Aliens was a tense ride all the way to the end because it kept interweaving lots of things besides aliens for you to be worried about and delivered a finale that had a lot less to do with aliens than the title would have suggested.

If you don’t have anything more than your main conceit then you have no choice but to throw increasingly crazy things at the screen, from out of nowhere, to generate a big finish because by then your story has run out of juice and you desperately need something to produce the big finish. The better shows have one or more subplots or ideas that have been percolating in the background that can be brought to the fore in the final act and deliver a more organic finish.
That’s what I think.

Sixth Sense is one of the ultiamte shining examples of a film completely falling apart in the third act(not that first 2 acts were much good) anyone with even the tiniest bit of common sense could see that twist ending coming from a mile away.

Agreed. Even more remarkably, the same director topped it with Signs - imo in the running for worst ending ever. Actually come to think of it, almost all his movies fall apart in the final act.

There are plenty of counterexamples, however - horror films that maintain their sense of dread all the way to a strong conclusion. There just haven't been many of those recently.

Absolutely. Even sticking with a very generic model of horror films, I don't think that the shift from tension-building to the reveal and final battle automatically results in anticlimax every time; I just think that it needs a competent script-writer and director to make it work, and particularly that it helps if the viewer has some reason to care about the characters.

I think Scream 4 is a good example of this, the twist ending surprised the hell out of me in a good way and it didn't feel contrived at all. And yes, the ending to Signs was truly epic in it's stupidity.

Money wasn't Neeson's main motivation for starring in this film and the first one, the main reason he signed on was because his son really wanted to see him play a god.