Man I love this quite a bit. Love the animation style, would VA for it if possible honestly.

The concept is there, I will say. It bares quite a few similarities to the more abstract children's media of the 90's and 00's, and that's obviously intentional.
However there are quite a few things that make a good "subversive horror", but the main two are visuals and audio, the latter being the most important. It can look incredible, be the most visually horrifying piece of media to ever be created, but unless the lack of audio is the purpose, then having audio that is lower quality than the visuals will ruin a good concept. For example, Mr. Circle's voice. It seems fairly obvious that you want his voice to sound robotic, like a TTS voice, and why you didn't use one is your choice, but even then, it wouldn't have fit anyway. Why would the creators of a children's show use an unnatural sounding, commonly unnerving method to voice a character, especially back when they sounded even more inhuman and unnatural? It doesn't make much sense. Secondly, the execution of the pseudo-TTS voice detracts from the horror factor, because it's not quite unnatural enough to be convincing. You either should have commited to the TTS voice, or perhaps went for a more natural tone. It would have made more sense for a children's character, and would have been more malleable than a TTS program. The actual parts intended to be scary aren't much better in this regard. A long whisper into a microphone does not a scary voice make, not even when you bump the volume up by a few decibels, and if the normal voice removes from the horror, the actual horror voice doesn't do it much favours.
And now, the visuals. While the concept of simple face-on-screen characters isn't new, that's what really doesn't help this. It's not done in a unique fashion, or at least not done well enough to make that not count. The mouth movement is crude at best, and paired with the pseudo-TTS voice you went for, it appears more goofy than it does scary, especially in the parts that are supposed to be scary. The face contorting is not as offputting as it could be, because the face is neither appealing nor inherently unnerving in the first place, it's just strange. Subversive horror is built off of twisting the familiar into the unfamiliar, and if the familiar isn't, well, familiar, then the unfamiliar simply becomes unfamiliar, and while that can be done to good effect, the intent must be to present the unfamiliar and turn it into the unnatural, rather than an attempt at reprisenting the familiar becoming unfamiliar.
All in all, you have shown a surface-level knowledge of what makes subversive horror scary, and created something based on a decent concept, with expectedly lack-luster execution. Good effort, but in a genre of extremes you can't really take a middle ground with certain things, especially with integral parts of the horror.