Some people think there's a spectrum: fun <——–> hard.
I see people say "I just wanna have fun" in defense of playing on easier difficulties. If you're absolutely crushed by Normal diffculty to the point where you can't progress through the game at a reasonable pace, then sure, that difficulty doesn't fit you. That's not usually the point of that argument though – people seem to think that putting effort into playing and failure are bad things, because games are supposed to be recreation and "chilling out" is more fun that being challenged.
Well, sports are recreation, they require a lot of effort and they can be very enjoyable. That's not despite the effort, that's thanks to the effort required. Challenge is neccessary to achieve a flow state, which happens when the goal you're trying to achieve requires you to perform at the best of your ability, but it still feels attainable. A challenge that lets you achieve flow is one that is so enjoyable it's totally engrossing and distorts your perception of time and stimuli irrelevant to the task, because your brain is so dead set on the goal it deems keeping track of those things as unimportant in comparison. That level of challenge makes you improve your skills at the quickest rate possible.
Flow is an experience that meditation and mindfulness – techniques meant to put you in the best possible state of mind and carry actual, long term mental and physical health benefits – try to emulate.
So by playing at a difficulty lower that what you're capable of, you're robbing yourself of the best feeling attainable via the medium of videogames. Sure, maybe just seeing the graphics and animations is inherently satisfying for you, but that's pretty much objectively less enjoyable than experiencing flow.
There's another group of particularly annoying people who take the opposite stance – to them, playing games is a process of earning "gamer street cred" and playing on anything but the highest difficulty is a sign on being unworthy of playing at all.
Proving yourself is inherently satisfying, that's totally true, but just like with enjoying the "tactility" of a game on easy, it's not the best experience you can have with a videogame and difficulty based gate keeping misses what difficulty settings are: accessibility options.
As I mentioned, experiencing flow requires the task to be as difficult as possible without feeling unattainable – difficulty settings are there to make sure more players can set the game up so that the level of challenge is close to that maximum challenge they feel they can beat.
If you're being challenged optimally and I'm not, I'm getting an inferior experience, whether I need a higher difficulty setting or a lower one.
What troubles me the most perhaps, is when game developers get challenge wrong.
There is no challenge without a real threat of failure and consequences; there's no feeling of attainability if the punishment for failure inhibits learning.
An example of the former would be Borderlands 2. If I recall correctly, the game keeps the damage you dealt to enemies when you respawn after death, meaning the level of challenge decreases with each failure, you don't get to learn and you eventually grind through it regardless of how badly you're doing (except for missions with addtional requirements, like protecting something).
This, just like adaptive difficulty and "aids" that trigger when you fail repeatedly, can remove the challenge required to achieve a flow state.
An example of the latter would be Dark Souls 2. The punishment for failing a boss is often a completely excessive gauntlet of enemies, which is very tedious and, while not always being all that hard, still requires you to make no mistakes, since getting hit once means getting hit by the other 7 guys chasing you too. Having to go through the boss again can be a big punishment too – the double-boss arenas usually force you to play extremely passively and tests your patience extensively. Patience is a skill, but it's disproportionally important in this case.
This, alongside permadeath and requiring spending resources to attempt a fight, dilutes the test of actual skill required to beat a challenge with a discouraging price to pay for making another attempt.
(If you disagree about Dark Souls 2 being too punishing, then that's fine, but the game very likely wasn't difficult enough for you if the consequences of dying didn't bother you.)
My favourite example of a difficult game is Celeste, because the punishment for failing a challenge is resetting only the progress you've made in that attempt – if you die, you're sent to the beginning of the particular screen you failed on. No lives forcing you to repeat the whole level like in NES games, no ghost appearing to show you how to get through the screen, no roguelike inspired permadeath forcing you to get through 30 minutes of easy shit to get back to where you were. Just the game saying "you suck, try again" until you prove it wrong.
Of course there are games where what I said isn't completely applicable, and factors other than challenge that can prevent maximum enjoyment (sometimes also tied to difficulty settings, like enemies having so much health that your weapons aren't fun to use anymore), but I feel like it's very relevant to the majority of games I personally play.
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