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Another blogger on Gamasutra (Josh Bycer, here) recently made a post focusing on the merits of regenerating health. This is meant as an answer to it, more or less, and started its life as a comment reply that quickly grew to post-sized proportions. He makes some excellent points, and it's definitely worth a read for any designer considering their options when it comes to health systems, but, I must disagree... sometimes - as you see below:
The problem with regenerating health isn't that it has changed world map design from the classics (not sure I've ever heard that argument, actually) - it's that it removes from the player the onus to advance, or more generally, rewards a plodding, methodical approach to combat with a great deal of crouching behind walls.
Now in a cover based shooter, is this a bad thing? No, not really. The flow of a cover-based shooter swings from cover to cover, with a stop-and-pop at each. There are natural breaths at each cover spot that make sense as a regeneration point, and implementing health pickups there would make little sense. When you're out of cover, you're typically being shot, and thus not regenerating - you only regenerate at the cover points anyways. So all this does is frees them up from dropping a health regen item at every single cover location in a level, and thus allows the player a bit more freedom in planning their assault.
But putting cover based shooters to the side, what does this do to an action game that wants the player to rush, to drive forward, with a continuous flow broken not by bullet obstructions, but by the depopulation of each enemy group? By definition, if you're unwilling to let your player run away, you've now got to balance your health pool such that you can absorb enough damage to survive a group - and that almost never works, for any kind of decently large group. The regenerating pool gets so big that you can easily stand in front of an enemy and leisurely kick them in the shin until they expire, and if you're running low on health, hey, just duck behind a wall. So you try and balance that by increasing the length of time in cover before regeneration can occur, or by slowing regeneration? You just made the game easy AND irritating, since now the player does the same, but has to sit in cover an absurdly long time. You also just increased the necessary spacing between enemy groups.
Regenerating health in this framework turns the combat into a game of hide and seek, and quickly becomes absurd. You almost have to slap a comical voice actor onto your character (Nathan Drake in Uncharted for instance ;) ) for the slapstick running into fire then running back out to make any sense at all.
Now consider non-regenerating health. This allows for as large an enemy group as your health pool allows, and puts the onus on the player to survive the group, using any and all abilities they may have. It does not reward hiding - instead, it rewards efficiency, since the faster you take the group down, the better your survivability in the next encounter. If that proves too challenging? It's easy to fix by peppering the paths between groups with additional health pickups, and you can even scale those based on difficulty or how well the player seems to be doing. You have all the design tools you need to precisely control the player's level of tension, and their risk level in general (and their reward following that).
It even lets you extend the combats to much larger than what a single healthbar's worth of damage will get you, by the simple inclusion of spawning powerups in mid-combat. The easiest and most classic way of doing that is spawning powerups from defeated enemies, a technique Metroid pioneered to great success. You can even peg the the level of the powerup spawned to the difficulty of the enemy, to better balance how much health you get based on the difficulty of the encounter just survived.
... and you get all of this without ever asking the player to interrupt game flow and go hide in a closet.
Now some games do a sort of hybrid approach - regenerating overshields protecting non-regenerating squishy bits - and it does help, but it still shifts the gameplay flow. What you're encouraging now is efficiency with dodging, where the player is likely expected to push through combat as effectively as possible, but while dodging and weaving in and out of cover. In some gameplay styles, this makes sense (Chronicles of Riddick is certainly a good example), and it often has the effect of ratcheting tension even higher given how few discrete units of unrechargable health you typically have. It still isn't the best choice in all cases, though - such as in a Ninja Gaiden or God of War, where you want the player to go all-out, ducking and weaving only to quickly position themselves for their next attack.
Still others effectively do pickups - but mask them. As Josh mentions, in Infamous for instance, you get a bump for getting headshots (with positive Karma), and can recharge energy in combat. The key here, though, is that that is not regenerating health - that is a health pickup that's been integrated into the core design in a more logical fashion than a literal health pickup. It is a discrete point or powerup gained through specific player intervention. The headshot in particular is effectively a powerup drop on enemy death, just without rendering the drop / designing to allow "picking up" the drop even if the enemy was killed at a distance. Similarly, the recharge points are health packs that require a button hold to pick up rather than simple proximity. This is excellent, and works well, but it needs to be kept clear that this is very different from regenerating health, and has an effect on play flow nearly identical to the classic health pickup approach.
As such, you need to carefully consider your game's genre and desired flow before shoehorning in a health system. Some (few) genres do indeed work well with regenerating health, others work well with shields over non-regenerating, and still others work best with no health regeneration at all. You also need to consider the time you have to balance the system... fully regenerating health is easy to toss in and get mostly right quickly, but unless it's the right genre, the resultant play experience will never be as tight and thrilling as the same done with carefully designed non or partial-regenerating health.
So, like I said. It's a good choice... sometimes ;)