While I heard that the "toxicity" issue in Overwatch was reportedly apolitical at least initially and tends to revolve around things such as character selection, I was wondering if any regressive style moderation practices they implemented allegedly in response to this made things worse?
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First of all, when you target your game to attract a bunch of mentally ill people, then you're going to get them and all the problems that come along with them.
Secondly, when you attempt to alleviate "toxicity" by bearing down on the community and micromanaging the inherent competitive nature of a game, you're simply going to get MORE of it, because either someone is going to go unpunished who someone else feels should have been punished, or others will be punished unduly for causing some kind of "microaggression" for the aforementioned mentally ill group.
What ends up happening is you compound the problems and create more problems, because the more you try to micro-manage, the more some aggrieved party feels that their aggressors aren't being micro-managed enough, or the people being micro-managed feel like they're being moderated too much. You simply cannot win.
It's why older games let you mute/block people you didn't want to play with and call it a day. Or you could add servers to a blocklist if they were ran by an admin you didn't like. Or if you were an admin you could add players to a ban list if they were hackers/cheaters/trolls/etc.
Simple tools work best. As for restricting players from picking duplicate characters... well, does that solve any problems? No. Some games let the host pick the restrictions, so if someone hosting doesn't want dupes they could turn the restriction on. That solves all those problems. Games like Smash Bros., is more of an anything goes, and so you get what you get.
However, aggressive moderation works about as well in video games as it does in real life. Do Communistic/Authoritarian tactics really increase societal happiness, comfort, and satisfaction? Well, what did we learn from all those aggressive lockdowns in 2020? Same thing.