Title says it all really.
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Bioshock 1. I have never played a game that the atmosphere told most of the story
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Halos
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Final Fantasy.
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Mass Effect 1, Halo CE/3 (if we're talking terminals)/ODST/4, Metal Gear series.
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Fallout. I get so lost in those games, in the backstory and in the world, that other games just pale in comparison.
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*Flamesuit on* The zombies mode from Call of Duty.
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Silent Hill 2.
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Well look, they are three different things: atmosphere, lore, and story. Some games are good at one and not the other two or any other combination. Some games are [i]good[/i] but not great at all three. (Mass Effect in that category for me.) Of the games I am acquainted with: Atmosphere: BioShock (that sense of pressure and moisture is unforgettable, plus the environments are just off-the-charts). Metro 2033, too (it makes Fallout look like a tropical getaway). Lore: Uncertain. Elder Scrolls and Fallout are strong contenders. (I don't think Star Wars or Lord of the Rings games can be put into competition here, just not fair.) Story: The Witcher 2, Knights of the Old Republic II. I do not think I could pick the best synthesis of all three... just too many variables. But I think BioShock, Elder Scrolls, Halo, The Witcher, and, unfair as it is, Knights of the Old Republic are all in the discussion.
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Halo for atmosphere. The Elder Scrolls for lore.
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Star Trek Online has an amazing atmosphere.
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Dark Souls
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Atmosphere? Tie-in between Shadow of the Colossus ans Bioshock. Bioshock wins over SoTC with lore though as a technical victory (story is too debatable). Also I feel like mentioning Jade Empire.
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atmosphere: Shadow Of the Colossus for SURE. Lore: Halo!
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Knights of the Old Republic, and the Fallout series.
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I think that the first Mass Effect, Halo CE, and ODST had the best atmosphere. They all had this sense of mystery and wonder that wasn't captured by the others in both series.
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Halo comes out on top for lore. I do love Mass Effect, but the whole god-child thing ruined it. With the atmosphere however, still Halo for me. I remember about 9-10 years ago being deep under a Forerunner containment facility in CE, the first time I had seen the Flood. I was scared. I also remember watching in horror as Emile got stabbed, and feeling crazy and frantic on the last level of Halo 3 (as well as CE).
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Myth: TFL.
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Atmosphere? Shadow of the Colossus hands down. Lore? no clue.
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Mass Effect for lore, easily. Although Halo's lore might be more in-depth, Mass Effect provided the Codex, so players didn't feel like they were missing out if they didn't read the books. The codex was also built by the player, so you couldn't just read through it and know all the lore before getting past the first mission; you had to ask questions to learn. Although this made Shepard at times, seem like he had just been dropped into the galaxy with absolutely no prior knowledge of anything, this was a risk that paid off.
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I prefer Gothic 1 and 2 over every RPG currently on the market.
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For me it would be Mass Effect. The choice system made you feel apart of whats happening and was engaging.
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Star Wars Battlefront 2. It had a nice little story of the main trilogy but from a troopers point of view. Had awesome music Had a good atmosphere of battle with lots of exlosions/shots all around you.
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Silent Hill 2 for atmosphere and the Metroid Prime trilogy for both.
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Bioshock 1 and 2 are the only games where I actually was (as times) more interested in the lore/setting than the main plot.
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Mass Effect for atmosphere/story. TES and Assassin's Creed for lore.
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I'd have to go with Halo, Assassin's Creed, Bioshock, Skyrim, Mass Effect, and Dead Space. They all have great atmosphere, and a lot of backstory and lore besides what you'd normally encounter just playing the game.