The Elder Scrolls IV: Oblivion Retrospective
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Not only do players create their own character, but they can also forge that character's reputation through the deeds they accomplish and the factions they choose to align themselves with. Multiple guilds are available, from the mostly bread-and-butter Fighters Guild to the dark and mysterious Assassin's Guild. Players who have stolen goods are often chased, fined, and imprisoned by the Imperial Guard. Also, players who succumb to evil and/or illness can actually become physically altered, with their unnatural form scaring all but the most hardy of NPCs away.
The non-player characters in The Elder Scrolls IV deserve a special mention here. Through proprietary technology Bethesda has dubbed Radiant AI, NPCs of various towns are enabled to make their own decisions about their lives. Many characters the players come upon throughout the course of the game are literally living their own lives going to church, working for a living, eating, going to bed by 9 PM, and starting all over again the next day. Many NPCs hunt and kill game to be able to eat, others simply steal food from markets or people's homes. While the weight of the AI characters' actions may not directly affect the person playing the game, their need to live and ability to react gives Oblivion a very grand scale.
