In his last blog (http://tatteredpage.net/archives/5#more-5), Chas does something I like to do, which is to try to pull lessons from something not directly game-related and apply it to games. In this case, he was looking at the ideas of adventure in the great movie Secondhand Lions. One of points Chas touches on is when Hub says "I've won and lost a dozen fortunes" with a sense of pride.
I really like the idea of players have ups and downs. But as Chas points out, in the typical item-centric MMO, "Losing stuff is bad. Losing valuable stuff is grounds for quitting."
Perhaps the reason that most MMO players won't stomach losing much of their fortune, gear, skills, and such is just because they've been trained to think of such games as wholly progressive (your character should always be moving forward, never back).
LOSS AND RECOVERY
Lately, I've been really enjoying the RTS game Battle For Middle Earth 2. I always play the "War of the Ring" mode, which is similar to the Risk boardgame in some respects. It's not uncommon to lose territories and have to fight to win them back. Sometimes this means I'm pushed to the brink of utter defeat (losing the war, not just the battle) before I push back and win it all. Other times, I'm both winning and losing at the same time; as I'm gaining territories over here, my opponent is on the other side and taking my territories over there.
So here we see two types of player loss: whole and partial.
The death penalties of MMOs are usually (in the ones I played) just a hiatus in progression. The original Everquest allowed players to actually lose levels, and the skills associated with those levels. It also allowed the loss of attributes, through diseases and curses, until a cure could be acquired by the player (significantly, cures were readily available most of the time, so there wasn't a great threat of being weakened for long). It did not, however, allow the loss of items. Other MMOs I've played allowed items to become broken or unusable after a particular length of time, but the item decay was slow enough that item loss was rare or more valuable items were immune from decay.
I think the keys to convincing players to accept losses are hope and fun. Hope is the easier of the two. The player must have hope of either reacquiring the object lost or acquiring another object of similar value. The other ingredient, keeping the gameplay fun despite the loss, is more difficult, largely because of an inherent importance of optimization in current MMO models. In the player's eyes, it's not the character's circumstances which have been reduced; it's the character. If the player's character is merely a medium of power, then the loss of power is a loss of identity. The character is diminished, rather than the same character having to approach challenges in a different way.
Think about running out of ammo for your favorite gun in Halo, Goldeneye or some other first-person shooter. You probably cursed your luck and thought about how much more difficult the gameplay was going to be without that weapon. Maybe you were even asking yourself how long you'd have to fight with an inferior weapon before regaining your prized instrument of destruction. But you didn't turn off the console. Why? Because the weapon was just something your character was using...it was not representative of your character. Bond loves his PP7, but he's still James Bond without it. The Master Chief is equally the Master Chief with an assault rifle, pistol or needler.
What defines these characters in terms of core gameplay? The ability to kill the enemies in their path. Whether using a rifle or needler, the Master Chief can still kill Covenant aliens. Whether using a PP7 or grenade launcher, Bond can still kill Soviets.
But what happens when an MMO player's avatar loses his Grand Sword of Uberness or his Wrath of God lightning spell? He's no longer able to face the same enemies. He must fall back to less difficult enemies; he must fall back to a lesser level of gameplay.
The key to making loss acceptable in a power-oriented game is to ensure the player can accomplish core gameplay goals despite setbacks.
In a multi-dimensional game, the player can continue to enjoy the game by progressing in one way while regressing in another. Partial losses are possible only in a game with multiple, directly-interactive player goals. In BfME:2's "War of the Ring" mode, I have the goal of conquering new territories and the additional goal of protecting old territories. Thus, I'm able to experience the partial defeat of losing old territories while experiencing the partial victory of winning new territories, each as a subset of a unified gameplay experience.
In an MMO game with only the core gameplay goal of progressing to new objects (items, levels, enemies, etc), any loss is ultimately the same loss, a barrier to one path of progression. Many MMOs seek to provide an alternative to combat through artisanship or diplomacy (which are still, in a sense, presented as forms of combat, rather than creative or maneuvering [mental or physical] challenges), but these avenues of gameplay are typically too separate from the combat segment of the game to feel like different parts of the same gameplay experience. The artisan and combatant are essentially two characters, though topically one, rather than extensions of the same character.
Perhaps I'll come back to this to suggest paths for improvement, but I need to hop on other things for now. Feel free to pick up where I left off though. =)