There are two pieces of evidence which shows that the Terror Mask has knowledge of the fact he's in a fictional universe and in a video game. The first piece of dialogue has him state the game's Title. Another one was the following: "See, now that's the **** that gave this an M Rating."
Submitted By: Rogue_Agent
Lastly, if you die and don't hit continue quick enough, he'll ask, "Can you hurry up and pick 'Continue'?"
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