@FLStyle: This is hard for me to admit but I've never played a Metal Gear game, mainly because I've never owned a Sony console. I really should get onto that.
Since the post-modern movement is so complex and multi-faceted, you might want to define which part of it you're referring to here.
Post-modern stories aren't defined by audience engagement like it seems is at least a part of your thesis (if it were, every game ever is post-modern, not just a story like Bioshock's or System Shock's whose narrative specifically highlights that fact), but can be found abstractly layered into the very structure of the narrative. Post-modernism isn't a single device with a singular aim, but a way of telling a different kind of story than classical forms.
And so I have a hard time with the claim that videogames, or any medium, are the pinnacle of story-telling by definition, an assertion people also make because it has all other forms of art contained inside.
I agree with you that I don't spend enough time on defining which aspect of Postmodernism I'm dealing with, this is mostly because this used to be an essay with a whole lot of other stuff I had to put in to appease the assessment guidelines. I took that stuff out (it was irrelevant) and rewrote it so the focus was Bioshock and games. There are no doubt remnants of bad/vague writing.
I'll also agree that postmodern stories aren't solely defined by audience engagement, but I very much feel that its a large part of them. The Crying of Lot 49 for example, is a detective story that drops numerous hints of a conspiracy without ever providing answers, or even confirmation. The reader is used to searching for hints and piecing the clues together, but by the end nothing has been revealed and they realise they've been fooled.
My point when I call games the most postmodern medium (a sweeping statement to be sure) is simply that we are 'in' the text. We are walking around and interacting with the world, as opposed to just reading words or watching images.
Bioshock was not without its story telling problems. The biggest problem I had was that every single person was a bat shit drug addict or a robot save for the "mother" of the little sisters, Andrew Ryan, you, the Big Daddys and that dude that controls you. The characters in the world could have used some more personality. The citizens all seemed very one note and were basically zombies. This is what made the casino level so interesting. It featured characters that each had a unique personality. I would argue that if anything Heavy Rain told a better story while still giving you some control. Alan Wake ran into the same problem as this game. The story is crazy interesting, but eventually you kill so many bad guys the whole thing just starts to take you out of the experience. Similarly in Bioshock towards the end I was just shooting all cameras and turrets because I was sick of the hacking mini-game. The world of rapture was great, but the majority of its inhabitants were carbon copies of each other. The game would have been better with half as many enemies, as the repitition of combat would have taken twice as long to settle in and take you out of the experience.
The splicer's could've used more personality? I'll concede that by the last third of the game they become a bore but I feel that as far as video game 'generic cannon fodder' goes they're far more interesting than anything else out there. Some of their lines become repetitive after a while "Jesus loved me this I know, for the bible tells me so", "I'll do what you say!" etc, but all of the one-time events (the woman singing to her pram is a good example) elevate the splicers above many other shooter enemies. Hell, just the fact that they walk around muttering to themselves and banging their weapons on the floor instead of running straight at you is commendable.
I agree with you on the lack of real characters though, I remember when I first played it I kept comparing the character moments to Half-Life 2. In Bioshock every character moment happens through a window or cutscene, you never see them up close and if you do the control's been taken from you. In HL2 there are no cutscenes for starters, but in the exposition parts you could walk around, look at stuff, and all the other characters walked around too, doing their own thing. Bioshock sorely lacked this sort of energy.
I've not played Heavy Rain but I can agree with you on Alan Wake, I've yet to finish it because as you say the enemy encounters get tiresome pretty fast.
Thanks for the replies by the way, really enjoy the discussion.