This is something I've been grappling with myself. At this point, I'm favoring the use of what you refer to as "sectioned regeneration" though with varying amounts of health per section. The most base section being the largest and the size decreasing as additional sections are added through upgrades on the front end.
In my opinion, this allows the player to experience permanent (unless healed of course) damage early and quickly in any encounter while also giving them a reasonable cushion when encountering an especially difficult section of the game. The regenerative health is also very compatible with the way my game's scoring/experience system will be set up. The player will be encouraged to constantly be attacking and be engaged in combat to increase their multiplier. Thus, if they stop attacking and hide or turtle up to heal lost regenerative health, they will be losing their built up multiplier so it's a trade off between risking losing health permanently (or death) against losing their multiplier.
All this may change, but yea. This is what I'm planning on using for now -_-;; Maybe I'll go ahead and throw it into my code in the next update just to have some proof of concept of what I'm talking about.
Good stuff
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