I think difficulty settings are important. I tend to like challenge, and the rewarding feeling for dealing with challenging situations, so I tend to start on harder difficulties. I also think I suck less than the average player, at least in first person shooters -- so a difficulty optimized for the average would likely be too easy. Then again there are cases when I want to just "see the game" (e.g. the story, or just the atmosphere & experience the game manages to deliver) when I don't actually like the [usually boring, tedious, repetitive] gameplay mechanics that provide the main challenge. So if I can turn it down, I might enjoy the thing until the end.
It does take time and effort to properly implement difficulty levels though. As a matter of fact, I expect a "hard" game to be more *intense*, not just "hard". The lazy way of making a game hard, e.g. by reducing your hitpoints, adding to the enemies', and making them deal enough damage to often instakill you can actually make a game less intense, and more cowardly and slow paced. It takes tons of playtesting to properly balance difficulties, and it becomes harder and harder to judge the difficulty of your own game as you're so familiar with it (and get better at it all the time).
In other cases, people just screw up otherwise. Take Painkiller. I wanted challenge as usual so I started on a harder difficulty. Turns out this disables an interesting game mechanic entirely. On the easier difficulties you can collect souls OSLT from defeated enemies, and if you collect enough, you turn into a weird.. I don't know, monster, shadow, what? It's cool, and adds some depth to the game. And when you start on hard, that mechanic doesn't exist, at all. Shame.
People who think there should be only one difficulty setting are probably severely underestimating players' skill range and desired play style. Like I said, I think I'm pretty good in first person shooters. A big fan of Doom in particular, I'm always looking forward to new community wads, which tend to be *much* harder than the original game (or indeed most shooters on the market), if only due to the fact that these people have been playing Doom for up to 20+ years now. I always start on UV and try to do each level from a pistol start, and I think I fare better than the average. Yet there are levels that I may barely nail on my sixth attempt, in a wad that I find overall hard. Then I go watch first run demos from people who nail these levels on the first try (same settings as me).. and their comment about the wad is that it's a bit too easy and thus boring. Friggin Doom gods. With these setups, most players would just quit the game after dying two dozen times on the first three levels. Such a game wouldn't fare well on the market... thankfully, difficulty levels exist.
Difficulty settings are good, lazy game developers are lazy. Unfortunately.
How about racing games? For me, racing is most intense when you're treading the fine line between "faster than everyone else" and "fast enough to end up in a career-ending crash". How fast this is depends on your skill. Unfortunately, the average gamer either isn't very good at driving, or just doesn't take the game too seriously. So you find that in most racing games, you can crash and bump into things without much penalty. Heck, in some cases, it is actually faster to crash sideways into a wall (letting the wall align your car with the road up ahead) than braking into the corner and driving as you would if you weren't trying to kill yourself. Unfortunately, such arcade-y driving doesn't feel intense for me. If I can bump into shit and get sloppy without consequence, I will start to get sloppy and unfocused and the game will start to bore me... and, unfortunately, only some of these games allow you to select a "realistic" difficulty.
Instead, most of them have rubber banding. Sometimes very severe -- I'm looking at you, NFS Underground (2). Recently I had some trouble with a circuit so I kept trying, constantly getting better and better personal records. But the AI cheaters followed suit and consistently outrode me by a few seconds every time I set a new record. Now, if I crash, I usually restart the race right away. I was starting to get a little frustrated/bored, and made a few blunder corners, plus a head on crash into oncoming traffic... I didn't know whether to quit or restart so I just kept riding. As expected, that race was my slowest one so far. I also won that race, because the rubber banding made the AI suck so much more. Go figure.
NFSU actually has difficulty levels, but it probably just modulates the AI's speed on what appears to be (mostly) a pre-recorded route. So, at least on hard, you'll find them cornering specific corners tighter and faster than the game ever allows you to do with a car built for maximum handling & acceleration... Yeah, I suppose it makes the game harder. Not really more intense though, more just grindy or frustrating, on certain races. The difficulty is all over the place though, so other races can be beat without even trying.
Post edited March 16, 2016 by clarry