Health kits are a hassle to develop a game around, because you have to carefully plan where to place them and how many, in order not to make too easy or too hard. Even then, the player can find himself in a situation where he doesn't have enough health to finish the stage, which breaks the game. It's not worth the effort, regenerating health makes it all much simpler.
However, since so many people hate it, I think a mix of the two is the best compromise, essentially what F.E.A.R. or Prey did back in 2005: your health does not regenerate at all until you drop below 25%, at which point it regenerates up to 25%, which is enough to survive a firefight (if you're skilled enough) while waiting to find a health kit. That way you can't find youself in a "one hit and I'm dead" situation, but the tension is still present.
Alternatively, what Bioshok Infinite did: you have a regenerating shield which depletes itself in just a few shots, at which point you take health damage that needs to be healed with medkits. It's enough to absorb the consequences of a single mistake, but not to negate them when you're playing poorly.
A third option would be a medpack system, but with health stations scattered at key points around the level, far from combat situation as not to be exploited, like in Half-Life, but without the stations running out. This would allow you to backtrack and heal up in case you end up in a bad situation.
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