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"...Bizarrely enough, we humans would PAY these machines to crush us: we would insert coin after coin into the machine, and - in a dramatic proof of humanity's masochism - the more the machine punished us, the more we would feed it coins!"
Long, long ago, there existed large, monolithic machines. They were larger and heavier than we humans, and they could crush us easily - and did so. In fact, bizarrely enough, we humans would pay these machines to crush us: we would insert coin after coin into the machine, and - in a dramatic proof of humanity's masochism - the more the machine punished us, the more we would feed it coins.
These machines were called "arcade games", and one day a way was devised to bring them into your home for play on your own TV. This began a long series of events that led to such games becoming played by larger and larger audiences of players. Developers of these games realized that maybe humanity wasn't completely masochistic after all... in fact, it seemed like the less punishing a game was, the more people would play it. Within a mere couple of decades, this proud lineage of monolithic, human-crushing machines were reduced to sleek pieces of white plastic that any grandmother could pick up, waggle around, and actually have some fun with for a while.
VVVVVV has been called a hardcore game, even though setbacks for failure are minimal.
Setbacks in Prince of Persia (2008) are minimal too... thanks to your magic girlfriend.
"Casual Gameplay", aka "Hardcore Gameplay"
And so the question was asked: why have losing at all? Though games continued to often follow a model of presenting users with challenges and giving them a setback when they failed to conquer a challenge, those setbacks became less and less. The excellent modern indie game "VVVVVV" by Terry Cavanagh is described by many as a game of hardcore difficulty... and indeed you are guaranteed to die a great deal as you face the challenges in the game. Yet in a certain way it's incredibly non-hardcore, because the game is liberally littered with save points (sometimes multiple on one screen) from which you'll respawn instantly when you die, with no other penalty. The penalty becomes "redo the last 10 seconds or so" - a far cry from the "3 lives, and each time you lose one you start the whole level over, and when you lose them you must start the entire game over" of Super Mario Bros (much less the "...oh, and also, pay me another quarter!" of Donkey Kong).
Another interesting example was "Prince of Persia 2008" (a name I recommend we all adopt when referring to this game, to reduce confusion about exactly which of the many PoP games we're actually talking about), which was a fairly controversial game for having what was perceived as incredibly low difficulty, mostly because the player character could never die: when the player failed, the Prince was always seen to be saved from death at the last moment. Of course, this did still set you back to the most recent checkpoint you'd touched a few seconds before. Again, this game was labeled "too casual" by most gamers... even though the gameplay I just described is mechanically the same as VVVVVV, the only difference being that you don't watch your character die before the reset occurs. Apparently the pivotal question deciding whether your game is labelled "super casual" or "super hardcore" is, "do I get to watch a character die?" Which makes me think that maybe what hardcore gamers really want are snuff films.
Donkey Kong is a classic example of the arcade-style setback structure.
Know What You're Sacrificing
I'm actually okay with the VVVVVV, "minimal setbacks" model of gameplay. I agree with Raph Koster's "Theory of Fun" - that at the core of fun is the experience of learning and mastering a skill - and I love games that present me with a challenge that I must face over and over until I conquer it (learning with each iteration, of course). In general I feel that the tighter you can make that "loop" - of trying, failing, and trying again - the better.
But I do think we should be aware of what we're sacrificing when we choose to make setbacks minimal. Let's go back to Donkey Kong:
As you progress through a screen of Donkey Kong, tension continually increases: because the further you've gone from the checkpoint (the beginning of the level), the more you fear dying and losing all your progress. In other words, the farther you travel from your checkpoint, the greater you feel the risk of losing is, because you'll lose so much progress. On the first screen of DK, standing on the top platform a few feet away from the great ape and trying to judge the perfect moment to scamper up the ladder to victory, the player's tension and excitement is palpable. If the game created a checkpoint on each platform so that when you died you were restarting on the start of the same platform (rather than starting the entire screen over), you would lose this excitement and feeling of having a lot to lose.
The same thing is going on, on a higher level: The more screens I proceed into Donkey Kong, the more tense I become, knowing that I'll lose all that progress once I lose all my lives. (And of course if I'm Billy Mitchell or Steve Wiebe, then I'm very invested indeed in avoiding death, as I don't want to see my score reset.)
In more recent examples, several recent iPhone games that I love - Canabalt, Flight Control, and Doodle Jump - have very arcade-like structures in that they're based around generating a high score, and ramping up the challenge as the game proceeds. Again, the feeling of "I've come so far and have so much to lose" comes very much into the foreground when you've gotten further in these games than you ever have before.
Here are a few "high-setback" (and therefore high-stakes) games - some of which have a major cult following, partly because of the tension
rogue and NetHack, the classic ASCII games which a player can delve into for many hours, and which allow saving your game... but which automatically delete your saved game file as soon as you load it. The result being that whenever you die in the game, there is no way to restore any save, and you must start over entirely.
Kevin Yu's Spelunky, a modern indie game that derives much of its structure from the "rogue-like" formula, including a lack of savepoints.
You Only Live Once, a small experimental Flash game that can literally only be played once!
Flow vs. Self-Consciousness
Dock Ellis pitched a no-hitter under the influence of LSD. Did it keep him from feeling the tension?
This tension I've described is actually pretty obvious and noted by many people. One thing that's a bit more subtle, however, is something that emerges from this tension: a form of "performance anxiety", and particularly what I'll describe as "the battle of self-consciousness." It's common to any activity that involves getting into a state of "Flow" (or "in the zone" as some would say): the problem is that almost as soon as you enter this state, and especially as you get closer to achieving a difficult-to-achieve goal, you recognize that you have entered this state; and this recognition itself tends to create self-consciousness that, ironically, pulls you out of that state.
In other words, as the stakes increase, and as the player gets closer to achieving a difficult goal, the more tense they'll become... and therefore the more likely they'll be to become self-conscious and thereby possibly ruin their progress towards the very goal they're approaching. These are inevitable results of humans engaging in an activity that requires high skill, with high difficulty, and high stakes... and while it's not for everyone, this is sort of experience is exactly why some people play games at all.
Psychologists sometimes call this "Analysis Paralysis"; and in sports the phenomenon of "choking" is thought to be a result of this. Of course all this sounds super-hardcore, and it probably is - your grandmother is probably not looking for this experience when she picks up a Wii controller with her grandkids - but ask yourself: if the average person wants to have this unique experience, where are they going to get it? Although a number of hobbies may provide this, the easiest and most direct way to find a "high-performance, high-challenge" experience - and the unique psychological states of that experience - is by picking up a challenging video game and delving into it. It's a part of our lives that games can fill uniquely well, and we should think carefully about taking away a game's capability to give the user these unique experiences.
Conclusion
To sum up: if there's no risk of a large setback, you lose a great deal of tension, and a great deal of interesting player psychology that they experience largely thanks to that tension. Whether you want that sort of tension is your choice for your game; but be aware that you're giving it up when you reduce the magnitude of setbacks in your game, and be aware that may be diluting one of the core experiences that your player can only get from a game (as opposed to a book or movie): a personal challenge, a chance to master a skill, and the chance to test how they perform under pressure.
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