The only sane person in that conversation seems to be Ragnar.
They've kinda got the angle on interactivity and story wrong. Games only have one aspect that books and movies don't have, and that is their interactivity. Clint and Chet seem to prefer throwing out the baby with the bathwater, trying to simply create an environment that enables the player to create his own story, and not even bother supplying some creativity of their own. I guess that was what was supposed to happen with Far Cry 2? An absolutely horrid game when it comes to story and storytelling. Sure, I had some moments that were interesting gameplay-wise, when defeating so-and-so, but are those moments I will remember? No, not at all. It was all in all a very, very forgetful game. Like hell anyone gave a damn about the buddies in that game; they were as memorable as the flags you collect in Assassin’s Creed. From the basis of such failures they seem to wish to state that the narrative is dead and we should simply have fun in a sandbox.
A counter example would be Saints Row 2, which I’ve just finished. (A somewhat similar game to GTAIV but sadly not nearly as well ported, keeping in mind that the GTAIV port wasn’t that great either). Although I might remember some 'cool stuff' I did, that's hardly at the front. What I remember rather is the truly wonderful voice acting, the characters, which I could describe to you in some detail, up to the point where my imagination kicks in and I fill in the blanks of what I don't know. Although I have a fond memory of the coolness factor of certain side-activities, these are not what truly impressed me. The cinematic cut-scenes on the other hand were utterly brilliant most of the time. By Jove, I'll remember those. Unless a game can be created that uses the full power and creativity of a cut-scene, the traditional way of story-telling simply can’t be forgotten. A well made cut-scene can be incredibly powerful. You can show your character doing anything, or at least, let him be vastly more capable in his mobility and creativity of speech than he would be in the ordinary game play. You’d need virtual reality to enable a similar amount of freedom.
Clinging to the old story-telling ways to the exclusion of other types isn't going to do a lot of good in the end either though. The high point of something like that was probably reached with a game like Planescape, and the original The Longest Journey (I don't know why they say Ragnar is the creator of Dreamfall and then don't mention the vastly better first game, the second game sucked on diverse magnitudes). No, what you need is true interactivity backed by a solid story. What you need are choices that aren't made depending on how you play the game but how you play your character, or if you are simply yourself and not playing a role, how you would react.
What gamers have become used to, and what now limits games in their scope, is the fact that people play mechanics, but not the world that the game creates. You ‘practice’ in Oblivion because you know that by performing this game mechanic you will level up this skill, you choose certain choices because you know that they fit with what you’ve decided beforehand that you would play; a good or a bad character. You steal regardless of playing good because the game doesn’t make you evil for stealing, you basically permit yourselves to do anything apart from those things the game world has explicitly told you that it would respond to.
People playing mechanics isn’t something that can, or entirely should be, fought against though. There’ll always be FAQ’s, walkthroughs and whatnot, and in some cases these appear almost necessary because the developer simply hasn’t given enough clarity to a certain task. But what I would appreciate is if games would delve deeper into morality, and this is where interactivity can shine. A game should respond to the way someone plays, and not just based on clearly discernible choice-moments. A greedy ‘good’ thieving character should be confronted with different choices than a lawful utilitarian who believes that the ends justify the means. That way, the way a story and a world unfolds will be tailored to the way a character plays. If you give everyone the same choices it’s no wonder they will feel as if they have been given artificial moments of decision.
People far too easily end up playing gaming stereotypes that just don’t differ much from the errand-boy character who simply does what he is asked, kills the dragons, saves the princesses, loots the loot, and either chooses to do right or wrong. What I seriously would like to see is people who play as people and are confronted and treated as such. Games currently hardly support this, nor do they encourage it, and they certainly don’t enforce it.
I want to see the corrupt guard be confronted with a few fellow guards that had been tortured during a thieves heist that went wrong and for which the player had received money; I want to see the thief be confronted with children who got sold into slavery because he had decided to rob their entire house clean; I want the staunch upholder of the law be distressed about his believes when the only way to uphold the law seems to be the harsher direction his supervisor takes, who brutally slaughters thieves begging for their lives; I want the good to be bad, the bad to be good; I want everyone completely confused and baffled about a mere game having the audacity to challenge them in their believes about what is right and wrong. Give me the possibility to play an inquisitor who truly thinks he’s righteous (and in fact, is accepted as such, according to parts of the world) while slaughtering people he deemed heretical indiscriminately.
With the current limitations that games voluntarily abide to, it is no wonder people think the narrative is dead. If you can’t use religion, ethnicity, race, or even just philosophical questions about freedom and equality as important elements, if you don’t allow yourselves to surprise the player, to double-cross him, to respond to his each and every move, and don’t have the courage to dare to punish a player for his actions, for his stupidity, for his way of playing, or to even respond to such actions in a meaningful way; then of course will you end up with an enormously impoverished narrative. I guess that’s why books are so powerful, being the creation of a single person, whereas a movie or a game is usually corroboration, and requires vast sums of money. You just can’t allow such a project to require intelligence, or to be controversial in any other way then what has become 'traditional controversy', namely sex and violence.