One Flew Over the Cuckoo’s Nest meets Stephen King’s It in this 1987 threequel, when the Elm Street kids wind up in a hospital for the criminally underslept.

After being disappointed by Freddy’s Revenge, Wes Craven returns to shake the series from its suburban stalk-and-slash slumber – not unlike John Carpenter’s change of direction in Halloween III. But the Elm Street franchise is a little more thoughtful than Halloween or Friday the 13th, opting for psychological themes over boobs and butchery, although Dream Warriors delivers on that front too.

Despite the much needed change of location, Craven ensures continuity with the original by bringing back Heather Langenkamp and John Saxon, while Angelo Badalamenti’s score incorporates Charles Bernstein’s ethereal theme. The production values and tone are back up to scratch, treating the subject matter seriously yet playfully as intended. Director Chuck Russell gives the fantastic nightmare scenes the funhouse quality he would soon bring to The Mask, marrying Harryhausen stop-motion with vivid live action. Sequences involving human marionettes, the Freddy Krueger snake and Zsa Zsa Gabor rank among the finest in the franchise.

Co-written with Frank Darabont and Bruce Wagner, there is an innocence to the story of a young, diverse group banding together to battle the bogeyman (Robert Englund). The premise has proven surprisingly influential, not least on the X-Men franchise, with themes of adults gaslighting their children cutting deeper than a film called Dream Warriors might suggest. There is also an unusually strong cast, including Patricia Arquette and “Larry” Fishburne, and even Freddy’s corny kiss-off lines are fun this time around.

The flick falls apart in the third act, getting bogged down in unnecessary Freddy backstory and ultimately doing Saxon and Langenkamp dirty – and not just by dressing her as a 50-year-old. The impressive tone and FX crumble into a cheesy and confusing climax, which sees Saxon battle a shoddy skellington while the kids do gymnastics and shout, “I am the wizard master!” It is a letdown after a brilliant hour of hospital horror, making this third instalment the third-best in the series.