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The God Game genre is one of those genres that have not had good luck transitioning to modern markets. Incidentally, city builders which share similar mechanics are also on the list. Last year, From Dust was the latest attempt at creating a God Game and got mixed reviews. Looking at From Dust and the genre as a whole, the problems are similar to the ones a certain "Man of Steel" has fought before.
The idea of a "God Game" is one of those all encompassing terms (which is the same as the term "God",) that makes it hard to set a basic list of rules for. The problem is that looking at the genre; it shares mechanics from other genres. Strategy games, city builders and sand box titles are the building blocks of a God Game. The issue is that the more genres a game is based on. The more areas that must be polished and properly balanced for the game to work as a whole.
Black and White was one of the first attempts at trying to combine all three genres into one experience in 3D, and it faced issues with the design. One of the issues is with power, specifically, how powerful should the player be? If the player can shape the planet to their whim and summon meteor showers, then where is the challenge? That problem is what comic book writers have faced with one of the most popular characters of all time.
Throughout the years, comic book writers have had a tough time creating stories for Superman. How do you write meaningful stories where your character can solve any problem by throwing it into the sun? There have been many "mcguffins" used to weaken Superman, from Kryptonite, magic, red sun radiation and many more, (my only personal knowledge is limited to the Superman cartoons.) This problem has also found its way into the games based off of Superman. If the player has no limits on what they can do, then you have a title with very little challenge.
Some solutions have been basing the threats of Superman away from physical, and more emotional. Such as trying to save the people, or fitting in on a strange planet. The problem for games though is that it's very hard to do emotional or personal stories in games. The attempted solution in Black and White was to base the character's power on the people and was a God game where the player could die. Limiting the player's power is the easiest solution, but saying that "God is Dead" (I had to work it in somewhere) just feels like it goes against the nature of the genre.
As the players got further into Black and White, the freedom of being a god became more restrictive. Players would find themselves limited by belief and force to do things like picking up a rock and throwing it around constantly just to extend their control. The game required a lot of busy work keeping your people fed and healthy while training your creature.
From Dust had the opposite problem, as the game goes on the player's abilities increases. The final level gives the player complete control over the elements, which while awesome, does get boring. Due to the player's only meaningful interaction in the game being said elements with little control of their people.
In a way, Spore may be the most successful attempt at a true God Game, combining all 3 genres into one. However, it fails in the regard that each system is its own sub game instead of providing all 3 at once. Once players reach the Space stage (sandbox layer), there isn’t any reason to return to previous stages with that creature.
Somewhere between strategy, city building and sandbox games, the God Game genre at its best sits. The problem comes down to a simple question: How do you give the player the powers of a God, while still providing meaningful gameplay? I wish I had a perfect answer for this but I'm still pondering this myself. If I can figure this out, I'll let everyone know by simultaneously ringing every phone on the planet.