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How to deal with failure in videogames is crucial. However, for the last 10 years, it seems that it has been decreed that players don’t like losing so basically games are designed to prevent that from happening. Better get a player "stuck" than make them lose. This explains why this hasn’t received much interest recently, although I’m convinced that finding creative approaches to losing would have great results.
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Articles

Ingenuity and failure in videogames - 23 May 2007.
A recurring problem with modern videogames is that they don’t handle failure well. The player has to complete level after level, mission after mission... and don’t have the possibility of being less than perfect. The flipside is that to beat such games, the player imagination is not challenged, and winning is not as significant than in games that require the players to be creative thinkers, like the Mortville Manor we are discussing here. Beyond that, we’ll see how allowing the player to fail can in fact add value to games.