A penalty does not create difficulty, it only takes the player's time

I have heard "the player should lose something when they die, otherwise there is no tension left" in a lot of design meetings. A penalty does not create tension, it makes the player's next decision for them. From the moment you put it in, the player is not choosing where to go, they are going after what they lost. The most visible version is leaving something behind on death, because there you are handing the player a free objective: go and get back what you lost. They will walk to the furthest point they reached, take on the thing that beat them again, and the reward is the right to carry on as if they had never died. On paper you will not find a cleaner objective than that.

Except you are not the one setting that objective, the fight the player just lost is. In Silksong, dying leaves a cocoon behind: your money is inside it, and the silk upgrades you collected cannot be used until the cocoon is broken. The cocoon waits where you died, so if you died in the middle of a boss arena you cannot get your money back without entering that fight again, and a little more money piles up in the cocoon with every attempt. The game's whole structure is built on exploration, with the upgrades that get you through those fights scattered across the world. So the system that wants you to go exploring and the thing it takes from you on death are working at the same time.

Silksong saw this too and put three separate escape valves in. You can turn your money into an item for a small fee and that item survives death, there is an item that recalls the cocoon to where you are standing, and there is a charm that keeps half your money on death but eats an equipment slot. If a single mechanic needs three buffers to stay standing, that mechanic is not cheap. Do you have the time to write those three buffers?

Where in the world you drop the penalty matters as much as how big it is. In Shovel Knight, dying sends three money bags flying and they stay where you fell. The most common way you die is falling into a pit, and the bags hang right above that pit; you cannot tell whether they are reachable, so you keep trying. In Blasphemous the stains spawned inside walls and on top of spikes that kill you instantly, and the studio had to add a statue that sells them back to you. If you did not decide where your penalty lands, your level design decided it for you.

Death is only the most visible version of this. A weapon breaking, waiting until the next attempt, replaying a section you already cleared, sitting through an unskippable cutscene again. They all come out at the same door, they all take hours off the player. The old Korean MMOs did the heaviest version: dying cost you XP and dropped your level, so you were taking weeks back off the player. That has no respect for the player's time and in 2026 it is plainly bad design. I have written before that a player measures what your price was worth in hours, and a penalty cuts exactly there. In those hours the player does not learn to play better, they only learn not to take that risk again. The only thing they do is backtrack.

"But without a penalty the game gets easy," you will say. Edmund McMillen, who made a game as merciless as Super Meat Boy, defends removing the life system like this: once lives are gone, you can rest the difficulty on level design instead of on the penalty for losing a life. The studio that invented this penalty went the same way. In Demon's Souls, soul form cost you half your max health; Dark Souls dropped that health loss; Dark Souls 2 took 5% on every death; Bloodborne let a nearby enemy absorb the stain; and Elden Ring tightened the checkpoints and put most of them right in front of the boss. Across five games the penalty got lighter and the difficulty did not. That is why most teams reach for a heavy penalty: a penalty is easy to add, level design is the hard part.

Making the penalty heavier does not make the player more careful either, it makes them look for a way around it. In XCOM, losing a soldier leaves you with a rookie, the next mission goes worse with a rookie, and you lose more soldiers on that mission. The player does not play better to stay out of that spiral, they reload the save. Far Cry 2's designer Clint Hocking kept setbacks small, unpredictable and recoverable for exactly this reason: when the loss is small and unpredictable, the player does not try to escape it by reloading. Put your own penalty through those three questions. Is the loss small, is it unpredictable, is it recoverable?

A cheap penalty does the job too. In Super Mario Odyssey, dying costs you 10 coins, they sit in a ring where you died, and that money only buys costumes, so the mechanic turns into a marker: I died here. The smarter move is to take the same number from the penalty side and put it on the reward side. Crash Bandicoot 4's modern mode does not take your lives, but it keeps counting your attempts and unlocks an extra reward for anyone who finishes the level in fewer than three. Same counter, same pressure, opposite direction.

The modern AAA side went to the other extreme. Chanting "the game should be accessible, everyone should be able to play it," they started putting no penalty in at all, and what comes out is half-baked; in the Wolverine that came out recently there is not even a way to fail the QTEs. A game designed for everyone is designed for nobody. The Korean MMO had no respect for the player's time, this has none for their skill, and both are condemned to stay mediocre.

I opened the post on soulslikes because the penalty sits most visibly there, but the rule does not depend on the genre. Do not read it as "set your penalty to zero" either. The reason it works in Dark Souls is that a soul is money and experience at the same time, and I have written before about one resource tying three systems to the same decision. If the thing you take away is only a number, there is no tension in it, there is time taken off the player. Open your own game today and look at where the player fails most often, then at where the penalty they take at that point sends them. If those two are the same place, you have locked the player into the thing they could not get past with your own hands.

Your player is not afraid of the penalty. They hate pointless backtracking, whether that backtracking is level design or mechanics.