The basic formula for how to make an entertaining game was mastered by quite a few people. Since then it's just been evolving tech, and I think evolution in technology has done a beautiful job of bringing out the true potential in gaming. While it may not be evident in all games, in some great progress has been shown. Lemme show you a few ways gaming has evolved.
Demon's Souls
What did it do? It took new technology available (i.e. powerful internet) and incorporated it to enhance the game. This type of thing greatly enhances the experience the game provides. Was this possible years ago? No, and hence you never saw it. Advancing tech brought out true potential here.
Crysis
Was it even possible to create game experiences this immersive back in the day? Well maybe, but it took a ridiculous amount of talent and a great writer, something not seen much. With the ability to produce near photo-realistic graphics, the immersion of games has increased. This also enhances the game as a whole.
Just two examples, I'll maybe put some more later. But you're partially right: maybe at the core of things gaming hasn't fully evolved, but the advancing technology has forced gaming forward.
And hell sometimes the evolution I see has nothing to do with tech...
Machinarium
The adventure/puzzle genre is nothing new, it was the biggest thing out there about 15-20 years ago. But Machinarium, an indie game that came out last year, bests all of them (only POSSIBLE exception being Secret of Monkey Island, and I played the Special Edition so I don't know about the original). Why? Well maybe it has a little to do with tech, graphics like this weren't entirely possible a while ago, but they have been for at least a bit over 10 years. So what is it? It's evolution in gameplay, such clever nuances and genius subtleties that have arisen out of gaming once the foundation was set.
By the way was very hesitant to get this game, took me months to decide if I wanted. Needed a game to entertain me on my computer for a week so I tried it: GET THIS GAME. Support an indie dev, this game is absolutely genius, and retains the comedy of old adventure games, but cuts the BS like endless dialogue scenes. That's another area gaming has evolved: storytelling, which I'll get to in my last example.
Shadow of the Colossus
Let's get one thing straight: SotC's gameplay, while perfectly adequate, is not that special. I've seen plenty of games with better gameplay. But I have not seen many games better than it. Why? The atmosphere is an obvious pick. The epic feeling of being a lone hero taking down massive beasts is too. And ya, the gameplay itself is pretty fun. But the #1 reason I love this game: the storytelling. Back in the 16-bit days the only method of storytelling was through dialogue. Everyone made epic RPGs with endless cutscenes explaining what was happening. SotC completely innovates this method, leaving it all to the mind of the gamer, telling a deep story through subtlety and surroundings (seriously look up an interpretation of it). This wasn't being done years ago. They could've, I mean what was stopping them? You don't need top of the line hardware to do this, I mean the PS2 itself wasn't that powerful. It's an evolution in gaming.
I'd mention Braid too but I think that's a given.
So maybe gaming as an art form hasn't ALL evolved, but you can't say it hasn't come a long way. In both subtle and huge ways, both through genius game design and advancing technology, gaming is evolving.
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