For my money, very few developers have used the fantasy setting to tell truly fascinating stories -- or, rather, stories that could only have been told in a fantasy setting. There are so many limitations inherent in the genre that don't offer a concomitant benefit that I don't know why we haven't moved on to doing more games in the modern urban setting instead. But let's take a look at what that genre offers us.
First, consider the general level of technology. In fantasy, there is a strict restriction in place that keeps things feeling, for lack of a better word, antiquated. No electricity, no combustible engines, no printing press. Infrequently, you might find very simple machinery using gears perhaps, or steam-driven tech, but that's pushing the convention a bit. Maybe some siege engine action, crossbows, pulleys, etc. This really limits the scope of what the game can comment on, and not just from a mechanical standpoint. The invention of the telephone alone changed the face of the planet in profound ways. Instant communication over vast distances allowed mankind to think on a global level, rendering certain aspects of cloistered, small village thinking irrelevant.
In the modern setting, the rise of complex machinery and electronic devices brings a rich skein of complexity to the proceedings. It's now possible to entertain entire stories around the adoption of new tech, and how that changes society. Sure, you could also do this based on some of the great military battles of history that depended on new tech -- like the triumph of the longbow over armored knights at Crécy in 1346 -- but that's a game with a prophesied ending. It can only end one way, and thus offers very little in the way of replayability. For better or worse, hitting things with sharp lengths of steel feels done to death.
This limitation can be gotten around by the use of magic, but that's a particular brand of deus ex machina that offers its own share of problems. Because the actual origins of magical power are almost never explained, and the execution of these abilities rarely explored in depth, it becomes nothing more than a way to have the analog of advanced technology -- like guns, for example -- in the fantasy setting without any of the enriching complexity or even ethic considerations that go along with it. All too often, the inclusion of magic in a game just seems like a cop-out.





Your definition of fantasy seems a bit narrow. Fantasy basically covers any story or game where the physical laws of the real world are violated (magic, paranormal abilities, ESP, impossible tech) - so, anything from Lord of the Rings to Castle Wolfenstein to City of Heroes to Bioshock to Silent Hill can be classified as fantasy. Indeed, the hottest sub-genre of fantasy on the market these days is called Urban Fantasy, and features werewolves and vampires running around in contemporary settings - such as Twilight and TruBlood. Even alternate histories, where there is no magic, just a re-imagining of past events, qualifies as fantasy.
What you really seem to be objecting to is that game companies use that same narrow definition of fantasy when they make their games. For most companies, fantasy apparently must be set in a medieval world, feature orcs, elves and dwarfs, and be about fighting the ultimate evil. This is a lack of imagination on the part of the gaming companies, not a limitation of the genre. And there are a plenty that have broken the mold - the Myst series, Assassin's Creed, Shadow of the Colossus, and my favorite game of all time, Planescape - Torment, to name just a few.
A fantasy game, even one set in a medieval world, could be about anything - the power struggles within a thieves guild, protecting a caravan as it goes through vast deserts, finding the notes of a lost symphony, chasing a killer through time, raising and racing dragons for fun and profit, whatever.
So don't blame the genre, blame the developers that trot out the same tired tropes every year, instead of finding something new to do with it. The genre's fine. It just needs some new thinking. Posted at 3:10PM on Oct 21st 2009 by Nathan Long