The problem most people seem to have with Quest Chaining is three-fold. While nice in concept, the quests tend to be extremely dull and uninteresting (not entirely the developers' fault, it's pretty hard to make literally hundreds of quests all interesting without a lot of repeats).
The second reason is that it tends to be solitary in nature. While it could be designed otherwise, to my knowledge, every game that uses quest chaining has made the quests soloable. This results in an almost entirely solo experience from level 1 to cap, which many people find unappealing.
The third is reason is another design choice that could be avoided, but generally isn't. By it's nature, quest chaining moves you from place to place "conveyor belt" style through the game. Players almost never return to an area they have finished. For many, it quashes all sense of exploration and control that they have over their character.
Personally, I think "quest chaining" at it's simplest, could be outstanding. But as of yet, almost no one has accomplished the feat.
While I don't feel strongly one way or the other about instance and open world content (though as a casual player who does not participate actively, it is sometimes hard to find people to do instances with), I feel the need to back Rokien up on this one.
Campaign from FFXI was a beautiful piece of game design. It provided repeatable, interesting, dynamic content where the size of your group did not matter so much as the total number of people participating. It operated similarly to Hamlet Defense, except that it was open world, and all you had to do was speak to a guard to enter. Once you had entered, any action you took (be it support, healing, taking damage, or attacking) gave you points toward your prize at the end. It promoted teamwork without punishing those without a team.
In fact, because you could attack any target, even those claimed outside your party, extra-party or even extra-alliance teamwork was encouraged and valuable. Monsters were difficult enough that it often did take a party or alliance to kill them, but a large enough group of random soloers could also accomplish the task. If with a bit more difficulty.



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