Yeah it's crazy to think there was a time when level up shite was almost exclusive to RPGs. Well before every other game had to do a little of everything. Do miss the days when pure genre games were more common.
As for "losing" powers, depends on the game really. Like Metroid, remember joking with Champ about keeping everything from each game, where it would be at now. But I mean, obviously the design considerations to keep that interesting would be absurd lol. Level design chaos, enemy design headaches, crazy redundancies in your kit, say goodbye to new players, etc.
When that stuff is married to the games progression in interesting and entertaining ways, it's fine. Though in a longer series, over time, probably best to let you start with a bit more kit every now and then. Kinda silly that we still have to unlock bombs in Metroid.
When it's not really intertwined with progression and just serves as a way to drip feed power fantasy, does kinda suck. Very annoying in action games like Bayo, NG, DMC, TW101 etc. Newer DOOM too. It's like ok, guess my first play is just to unlock everything so I can start doing the really cool shit my next play. Stifling. Extra egregious in some titles. Having to unlock enemy step in DMC? Unlocking your dodge and block mechanics in TW101? So stupid.
Not that I don't understand. New player could be overwhelmed if you drop them into something like DMC with full kit. Though I wish these games came with a "I know how to play these games" option. Warn me, test me against a stupid hard boss to earn it, whatever. Rather that than spend my first run earning the right to play the game proper.
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