Gone Forever: How and Why Permadeath Affects Us
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Here's a snip:
Not only is losing a soldier in XCOM emotionally draining, but it's a tactical setback as well. You pour hundreds of credits into new armor and items, while the time required for promotions makes them investments in themselves. Losing an upper-tier colonel with abilities that saved rookies on multiple occasions creates a gap in your roster that takes time to fill. This makes progression all the more important because the newly gained abilities can prevent their own future loss.
The Diablo games give players the option of having permadeath with Hardcore mode. In action-RPGs, where the tide can turn at any second, this mode demands split-second decisions and complete skill mastery. Experience and exploration become much more important without the possibility of respawning, and every quest feels much tenser. Should you die, the character is erased and you're forced to start over at level one with no items at your disposal. This loss of items and abilities is even more effective than in XCOM, considering how unique each character can be. Whereas a leveled XCOM soldier can be replicated in a handful of missions, you need dozens of hours to recreate an elite Barbarian in Diablo.
Nothing drives home the importance of decision making and resourcefulness like the looming threat of death. It's one thing to be annoyed at the prospect of respawning when you're close to mission completion, but to be permanently erased from the game makes you appreciate progression so much more.