Whatever, it's not like I can win this discussion. I'm out :P
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NPCs are a thing you know? We could have them also be lively and as real as the players so they act human.
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I have an idea, two actually:
1) When people die they don't acutally "die" they simply wake up but no one on the inside knows since we've all been told that if we die in game we die irl.
2) We go the Log Horizon/Dark Souls route that means with every death, we begin to loose our mind more, unable to comprehend the fact we're supposed to be death but yet we're alive and slowly realizing that no matter what we do, we're trapped in an eternal cycle.
I hate to spoil childhood dreams, but being trapped in a game is not a good fate, its not paradise, its quite the opposite.
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Your comparison of LH vs SAO is flawed since its not the concept of death each series uses, its how the writers portray and actually write them, pretty sure everyone here can say that SAO has abysmal writing.
Either way... you are dying. Don't forget there also is an atrophication angle. A human being can only lie in a bed for approximately five weeks before they start to experience organ failure.
In order to avoid this a registered nurse has to feed you intravenously, to massage your muscles regularly and roll you over every few hours.
Once you finally succeed at logging out you have months of rehabilitation ahead of you and that's assuming you even have insurance and can afford such treatments.
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In terms of the RP’s playerbase— we’re likely to have drops, and having this mechanic would help the GM manage such things instead of character’s disappearing and having no imperative effect on the characters or the plot.
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I completely agree with Echoes regarding this.
I also bolded points of emphasis per my perspective.
.HACK, Sword Art Online, Overlord, and Log Horizon all appropriately define the framework of life & death within their frameworks a little differently— but all of them have point. The whole aspect of “if you die in the game, you die in reality” is a lot more significantly interesting to me and once realized by the players would actually create anxiety, paranoia, and dread. I think it is certainly more interesting than countless respawning. Death needs to have weight and danger— and ultimately I think Sword Art Online’s system is better than Log Horizon’s in this aspect (and probably this aspect alone). I would advocate for death having weight, meaning, and harshness to go alongside the RP’s themes.
Remember, just because the ‘Dark Lord’ didn’t explain to us how death works doesn’t mean it is one system or another— it just means whatever it is, it will be a surprise and that surprise puts people on edge and people on edge do stupid things.
Rereading the OP, I realize that my idea might not be able to work in its scifi/cyberpunk apperance, that said I feel like a magician-like character could probably pull off the core idea pretty well.
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Personally I'm all for permadeath (or some penalty for dying), gives the RP a feel of weight; running head first guns blazing again and again can only be so interesting. Plus actual character deaths do provide good plot elements.