(AKA Christmas Evil, AKA Terror in Toyland)
The story opens on a young boy named Harry on Christmas Eve. After Harry tells his younger brother about Santa (via a very heart warming ‘memory sequence’), his brother tells him he doesn’t believe in Santa, so Harry goes downstairs (to prove him wrong I guess) and sees something NO CHILD NEEDS TO SEE ON CHRISTMAS EVE

Seriously, people? I’m not here to judge, but do this s*&! in
your own bedroom. THINK OF THE CHILDREN!
Naturally the boy is scarred for life (I’d have run screaming from the room) and 30 years later we see just how bad the scarring is. Harry spends his days trying to emulate and live a very Santa life: He sleeps in Santa pj’s, his room is completely decorated in Santa imagery, he makes his own toys…

Yeah, that big ass shotgun in his lifeless little hands isn’t creepy at all.
…works at a toy factory, and, in the creepiest emulation of all, spys on the neighborhood children to see who’s been naughty and who’s been nice.

God, I really hope this isn’t how the real Santa does it.
Actually, Harry seems to have developed a problem with voyeurism in general, peeking through neighbors, co-workers and even his own brother’s windows.
In other words, Harry’s downright obsessed with the Jolly Old Elf in a very unhealthy manner. Unfortunately, Harry’s life isn’t as jolly as he’d like it to be. His co-workers don’t respect him, his brother represents the success he’s failed to capture despite his best efforts, and all the children of the neighborhood aren’t living up to his idilic expectations.
Fed up with the holiday hypocrisy and being mistreated at work, Harry finally snaps and decides to transform himself into the mythical figure he loves and most respects.

Hard to tell, but this is actually a chilling scene. He starts out ecstatic, but his jolly “Ho ho ho” quickly turns sad and menacing.
The evening starts out on a bad deed with good intentions, as Harry steals toys from the factory and then delivers them to a local children’s hospital. Receiving such a wonderful welcome Harry’s feeling in high spirits, but things quickly take a turn for the worse.

Santa! I knew I’d been good this yea-…Holy S*&%!!!
It especially gets bad when Harry goes to confront some of the co-workers who he feels have slighted the spirit of Christmas. He doesn’t get a chance, however, as he’s first confronted by a group of 20 somethings intent on mocking Santa Clause (gracing us with the preppiest accent they can muster) and he quickly becomes frustrated.

Reeeeeeally frustrated. (PS. I assume he made that candy
cane hatchet himself.)
And he runs off before he can confront them, leaving three dead yuppies in his wake…

Don’t all rush to help at once.
While the idea of being killed by Santa is creepy enough, Harry comes off as less menacing and more of a tragic figure who wants nothing more than a return to the innocence of his childhood. Despite it all, Santa seems to be the last noble thing in Harry’s life, an almost romantic ideal meant to overcome the hypocrisy of those who preach family values while simultaneously acting against it. Harry wants to help others, he yearns to help others, but as the movie plays out he’s no longer content just playing Santa and instead slowly slips into the role of bearded avenger.
Harry spends the rest of the movie taking revenge on those who’ve slighted him or his ideal Christmas spirit. He breaks and enters, dances, evades capture and unwisely freaks out a group of parents who keep a suspiciously large stockpile of pitchforks and torches nearby. Yes. Torches.

No, I’m not f*&%$#@* kidding.
For the most part, the supporting actors aren’t all that great, leaving most of the movie to be carried by Brandon Maggart and Jeffrey DeMunn (Harry and his younger brother Philip, respectively). This isn’t an issue at all as both actors do a phenomenal job with the material given. Marggart makes you feel sorry for Harry despite his growing lack of sanity and DeMunn brings an empathy to a man who most likely has an idea of what’s going on, but is powerless to stop it. One exception to the supporting cast is a small part by Patricia Richardson. She can do “Pissed off Mom” so well you’ll wonder why she didn’t smack those idiot kids of hers more often on Home Improvement.

You’d be this pissed off too if your spouse kept
blowing up the damn house.
Overall, You Better Watch Out is less of a slasher and more of an examination of a man’s slow loss of sanity. In that respect it’s more like Taxi Driver sans the higher production values or any De Niro. If you’re looking for more Christmas gore, I’d steer you towards the Silent Night, Deadly Night films, but if the gore’s not that important or you just looking for something new to watch in between the usual viewings of Black Christmas and Santa’s Slay, feel free to give You Better Watch Out a try. It really ain’t half bad.
You Better Watch Out is currently listed, but unavailable on Amazon under the moniker of Christmas Evil.
It’s also available as a DVD/Bluray combo pack. But be careful. Amazon is also listing it as a separate DVD release, but the movie under that link is a holiday themed, though unrelated, anthology film.