I've very much enjoyed opportunities to work on games (typically games that are included as part of educational websites or CDs). While often we're trying to design things so that customer can find their way around efficiently, games have a new challenge - they need to be entertaining and engaging. (There may also be pedagogy to tuck in to the game so that players can learn while playing.)
Challenge is one way off doing this - making a game where it is possible to lose or possible to win, according to some combination of luck and skill. Getting the level of challenge right is then a big, er, challenge. One of the weirder things I did at work once was to spend some time moving a plastic dinosaur around a chessboard, and sometimes putting coins on the squares. Yes, I did bill for doing this: I was designing a game that was a bit like minesweeper - players had to maneuver a character across a grid, attempting not to land on any of the hidden traps. If they landed close to a trap they received limited feedback that there was a trap on a neighbouring square. My dinosaur exercise was a way to make sure that these clues were not to hard and not to easy.
I would once have thought that an element of challenge was nearly essential to a game, but have changed my mind fro watching my son and his friends playing games (mostly on a Gamecube, but also on a PC). When my son was younger, losing would be extremely frustrating for him, and he would often play games in a way that reduced or eliminated the element of challenge. For example, he would play sport games, racing games or beat-em-up games in 2-player mode, but with no-one using the other controller (the need occasionally for him to make a move on the part of the passive player used to result in badly plaited controller leads).
He and his friends used also to greatly enjoy doing training or play areas of games again and again. The clearest example is the game The Legend of Zelda the Windwaker. In this game the player is cast as Link, a boy who sets out to rescue his sister when she is kidnapped by the forces of evil. In the first part of the game Link is free to play around in his home village. This allows the player to collect money and to practice the basic button combinations to control the character. My son and friends learned that, by not doing certain things, they could avoid triggering the cut scene in which Link's sister is kidnapped and the adventure begins. They would spend a (to me) surprising amount of time playing in the safety of the home village.
One of my son's other favourite games is Lego Star Wars This game has several features that make it enjoyable without necessarily having a high level of challenge. In Lego Star Wars, adventures start in a Diner and car park. This functions as a graphically elaborate menu system (players choose which level to play by passing through doors). However, some money can be found by exploring the diner, and characters from the story wander around the diner and car park and can encountered and battled. The battles are without consequence - defeat a character and it collapses into Lego bricks. Lose and your character does the same, only to reassemble. My son has spent many a happy hour in the car park. The lack of punishment for losing is a feature inmost of the levels of the game - fall in the boiling lave (or whatever) and you are put back a bit, but never encounter those enraging (to my son when he was younger) messages YOU LOSE or GAME OVER.
Now he is older (aged 9 now) he does these things less. My theory is that video games used to offer him a sort of fantasy pretend game made real. He could enter into worlds like Zelda, Pokemon, Digimon, Star Wars or his other favourites, and this was only spoiled by an element of challenge. He was (and still is) an avid maker up of pretend games and fantasy stories. In these he would of course be super-powerful and talented and everything would go his way. I think that is pretty typical of those kinds of games for that age group. The conventions in fiction of challenge and setbacks to wind up the tension don't apply to these games at all.
So now I think that some game players need and relish the appropriate level of challenge, while others are quite happy without it, if the game "world" is engaging enough. This may be affected by age as well as personality.
