All of us who remember Civ 2 remember a time before hardwired settings, or any non-gamecourse differentiation at all. In SMAC the vast diversity in factions made perfect sense b/c of the complexity of the SE system. However in Civ 3 it seems a bit superficial considering the rather superficial government model and the fact that real earth history has happened while SMAC was controlled by game authors.
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Civ 3 took the path I consider the worst of any, creating artificial differences without adding to the replay value or diversity of the game. All Riflemen look alike, all MA looks alike. You have to play a certain way with each faction to get their most effective use. This means you can only really play China or Egypt or any other civ at most one or two different ways. Additionally, it made games with ridiculous numbers of Civs a pipedream. Adding new civs to the game involved rebalancing it against the existing set of Civs. Obviously we see that this system is not adequate for the needs of a Sid Meier's Civilzation game and should be abandoned.
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Gameplay Templates:
However many who have not played Civ 2 are leary of trying something in which they have no experience. For those people I propse this compromise that will increase diversity and allow you to keep the well balanced UUs and traits: gameplay templates.
There is no reason a specific Civ needs to have its traits hardwired for all eternity. You could think of Civs as a juxtaposition of two pieces: the template and the asthetics. The asthetics of Babylon are its king, the GL names, the city names, the architecture, etc. The template would be Scientific and Religious with a (2/2/1) unit that replaces the Archer. If those pieces are not hardwired together, then you could have the Romans with this template, and they would have Scietnific and Religious traits with a (2/2/1) ardcher unit, probably called the Auxilla.
This means that the only play-balance you ever have to do is between 15-25 game templates(depending on what makes sense). Adding new civs means only adding the city name lists, the leader portraits(the heads are a waste of HD space), and other asthetic features.
Additionaly that would allow you to be much more diverse with presentation of each civ. Imagine these features that can be as universal or unique asthetically as one wants:
* The tech tree would be the same, but each tech could have different pics and names for each Civ.
* Units would all have the same stats(save UUs), but the graphics and names for units could be unique, meaning each military you face is diverse.
* Because the UU is one of all units that appear unique, it would be much more difficult to tell when an opponent is using their true UU.
* City graphics could all be diverse.
* Buildings could all be named and look different.
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I do like the idea of evoling civ traits, units, etc. Gameplay decisions and planning should effect what you get access to. Also, it sounds as though Civ 4 will differentiate units through training methodology as much as anything else, something that is realistic rather than artificial. However fully dynamic systems tend to produce clear paths to victory, even if they are numerous. A combination of pre-balanced and dynamic features is the key to making this a fun game rather than a simulator or mindless.