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I miss the times when Story + Mechanics > Graphics
No company approaches a game thinking that good graphics will be the only thing important. You think that SE didn't sink ungodly amounts of money into developing their game mechanics and story? The problem is that the concept of what constitutes good story/mechanics has changed over time.
You're looking at mechanics that were defined by the limitations of the technology available at the time. You don't think the game designers dreamed of the days where they could create games that made combat more real and immersive?
Tabletop RPGs used elements like rolls, action lists, etc. to try and allow the players to imagine the entirety of a game. You were meant to play it in your mind.
To be honest, that's not a concept that ever translated well to video games. They used the system because it's what was available. But unlike with tabletop RPGs, you don't spend the time in your head - you spend it interacting with the visual on a screen. That gave combat an extremely choppy feel that was never the
intention of designers, but was rather the limitation of it. When we're dealing with the human imagination, that's fine - those delays are accompanied by player interactions, discussions, (in short: higher-order thought and play).
Video games were very, very much a dumbed-down version of that experience. And I don't say that to bash games. I've never seriously played tabletop RPGs, and have always loved RPG games. But those limitations have always been quite obvious. Combat in old-school turn-based RPGs were very much about the concept of the event. But they never allowed for the immersion they could have had.
Now, immersion is FAR superior in combat systems. Maybe you're playing FFXIII, and you need to scope the lay of the battlefield and adapt quickly. Or maybe you're more of an omnipresent controller, who issues orders to a whole group and needs to consider things tactically (a la Valkyrie Chronicles).
Either way, your experience of the combat now gets to be something more akin to the higher-order play of the original tabletop games.
I know it's something of a weird example, but look at SWTOR. They removed the auto-attack from the game, and they introduced combat animations to reflect actual combat scenarios. When not launching an attack, your lightsaber-wielders would deflect bolts, you might be hiding behind cover (to pop out and shoot), etc. The end result was combat that somehow felt more organic and real than in other MMOs. It brought you into the fight, rather than making the fight a series of CD timers on your abilities.
It's a similar concept. And they've applied it to turn-based/menu-based mechanics to make them more immersive as well.
So you're right, you probably won't be seeing FF7's combat system again (unless they remake FF7, which I feel like I've heard mentioned in this E3 coverage?).
But it's not progress for progress' sake, and it's not a dismissal of gameplay mechanics in favor of graphics. That's an absurd argument.
Just because what you happen to subjectively value with regards to story/combat differs from modern game designers doesn't mean they don't value those at all.