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'Elder Scrolls Online: Lamenting a challenge-free landscape' - article by Biobreak blog
(biobreak.wordpress.com)
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but by nature MMOs are extremely static in terms of the world, NPCs etc because they have to be there for every PC at every stage of their story. To me that always makes them feel less alive despite a bunch of PCs scurrying around.
So are a lot of single-player games. Players running around in the background just add some semblance of "dynamic life" to the world. There's also the possibility of "well, I'm not playing with people right now but I could if I really wanted to".
I'm not saying that your perspective is wrong on that (I tend to bounce between the two views for example) but for some people just being in the same world as other players provides enough dynamism to make it feel more interesting than playing completely on your own.