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When I first heard about this game a few months ago, you could probably have summed up my attitude as 'mildly intrigued.' To be honest, Morrowind was actually a bit of a disappointment for me. I'd loved the visuals, the setting and even the plot, however, the game and certain aspects of its interface were so uninvolving and shallow that I wound up being rather turned off. When I heard Oblivion was going to run along similar lines, I expected more of the same. However, I bought this game on release date, and my prejudice has since evaporated.
The premise is very simple. As in Morrowind, you are pretty much let loose over several square miles of fantasy terrain, populated with the occasional city, town and farmstead. Random beasts and bandits wander the wilderness, and the towns are populated with a series of characters, some of whom will be able to give you quests. Completing quests gives you rewards, but is by no means neccesary. It's perfectly possible to simply wander around exploring. On top of this, however, there is a main plot, which you can pick up and leave whenever you choose.
Where the game differs from Morrowind is in the way this concept is implimented, and the way in which everything comes together to give a greater illusion of reality. People no longer stand around in the street all day waiting for you to come and talk to them. At night, they go to sleep, and during the day they follow their own patterns of behavior. It's a simple and rather superficial adjustment, but one which has been missed out of most previous games, and it does definately help the sense of immersion. Learning where various characters will be at various times (though for quest characters you can get them marked on the map for you) becomes part of the game, and some of the quests even encourage you to do this.
Another great step up from Morrowind is in the dialogue system. Actually, when you dig into how this system works, it's pretty much the same as Morrowind's system, but it's the improved implimentation which makes it so much more involving. Unlike Morrowind, there is a meaningful ammount of voice acting (though it's not exactly Oscar winning, neither is the dialogue) which certainly beats trying judge a persons mood and personality from lines of text. The number of possible 'topics' has also been massively scaled down for each character, allowing for far more individuality of response. People will often talk about things which interest them, based on their game role and position. It's a very basic update which nonetheless gives you a much greater sense of interaction with the game world.
All in all, this game feels much smoother, more immersive and much better put together than Morrowind. Deep down, you're dimly aware it's a similar game, but it just doesn't feel that way. There are still flaws, of course. As in Morrowind, the balance of certain skills, races and star signs is far from perfect, though it has been massively improved, and the system of experience, while it's certainly very unique. Is open for abuse. Sometimes it seems that accomplishing difficult, fun and meaningful actions is comparatively unrewarding in terms of character improvement, but this is a consequence of what is actually a very unique and fun way of handling experience. For those who've played Morrowind, it's worth mentioning that the emphasis on training has decreased, in favour of an emphasis on practice (something which was an interesting but useless curiosity in Morrowind due to the ease of getting training.)
All in all, if you're a fan of RPGs, enjoyed Morrowind or it's predecessors (or indeed Fable, or other games like that,) like non linear gaming and are prepared to lose a few nights sleep, I'd strongly recommend giving this game a try. It's not perfect, by any means, but it's painfully close to being what Morrowind and the other Elder Scrolls games were intended to be from day one. You'll have fun, I promise.