Blooper leaves a message stating The Medium is their most ambitious title yet, which might just be cost based statement because Observer is twice the game The Medium is. More mysterious, more intriguing, more creative, more surreal, and actually unnerving.
But The Medium is definitely a huge improvement in both voice work and overall production value. I loved the lead's even temper and cheery demeanor keeping her going in the dilapidated hell hole. The monster designs and disturbing stories that accompany/precede them are well presented. The visuals are often beautiful with far panned out shots and moody environments. Like others have said, the dual world play is disappointingly shallow, but as a vehicle to drive the intriguing story and cut scenes forward, it's good enough. Too bad the ending did nothing for me, and the scare factor is just too low for the game to offer much tension.
Verdict: Watch The Medium. Play Observer.