Earthdawn was supposed to be set way in the forgotten past of the planet Earth on which we all real life live, at least the way it was back when I was first introduced to it. I haven't read the newest edition yet.
That, to me, was very sad.
Imagine for a moment, being the Tskrang that tends the eggs that don't hatch. The forth world has ended. The fifth world is here, and the fifth world does not have enough magic for Tskrang to live in it.
Imagine being part of the generation of orcs that were born just after the dawn of the fifth world. Imagine knowing that your parents are fiercer then you, stronger, they burn more brightly, and less long. You are something more akin to men.
Imagine being the young apprentice so desperate to master an art that's age has past that you've bound yourself with awkward oaths, bizarre geasa, and the lingering twitches of too much psychedelic drugs, in the hope of the last shred of the power your order once held.
It's very sad to me.
If we were to write a RPG about a world that magic has gone from, how could we do it to include the same types of elements, (powerless wizards, sleeping dragons, a dying race of lizard men, a vanishing race of pixies, demi-humans [elves, dwarves, orcs, trolls, maybe others, hobbits, gnomes, whatever] born like men) but make the game less of a downer? How could we take this concept that has the potential to be very bleak, and give it redeeming qualities?
In some sense it would be post apocalyptic, because one encounter could be a fleet of sky ships, half buried in the sand, the crews having tried to walk to the edge of the desert, but none ever heard from again. But it wouldn't have any of the weirdness that generally accompanies post apocalyptic settings, because the magic is largely gone. Beast encounters would be normal bears or tigers.
Encounters with people might be tremendously bleak, especially if one or more adventures revolved around communities that relied on magic to an extent. No more magical healing. Paranoid Witch kings with no power other than the power of their propaganda and slavish followers. An adventure where the PCs are in a race with other adventurers to find an item or place that rumor has it still holds magic.
Holodomor has a mechanic whereby characters can have passions that get worn down by using them. And Misspent Youth has a system whereby you can sell out your traits in order to win if the dice come up lose. I'm thinking that something like that, some sense of having magic that the characters try to hold onto, but then lose or use up, never to be recovered, would be good for a game like this.
But what would make the game fun? What would make it worth the players time to fight through this bleak landscape?
My two thoughts so far are 1) Community building, and 2) Everyday miracles.
For community building, the characters would be adventurers and slowly give up on the world of magic in order to build something new and lasting in the new non-magical world. If I recall correctly, Living Steel was a post apocalyptic game with some rules for building things and supporting a community after their world was destroyed. I could dig that up and look it over to hopefully inspire me.
That option would require me to write endgame rules so that once the adventurers use up all the magic they have from the previous world, they would retire to their town that they fostered, and the endgame rules tell us if the town survives, or if it is washed away in a flood, conquered by belligerent neighbors, etc.
For everyday miracles, the characters could restock their magical traits that they either used up or sold out or whatever, by getting new "magical" traits whenever the PC is present at an amazing event, the acceptance of a daring quest, a legendary battle, the birth of an important prince or princess, etc. If the PCs use up this type of magic, it might represent the characters getting over it, refusing to live on past glories, always striving for the future.
I don't know. Kick this around. Maybe you guys can make this into something.

Struggling to find a way.
I think that in a game of this type, it should always start bleak (I'm talking from a story point of view at the moment) the loss that has been suffered should be apparant in every location and every desperate community. What makes this fun is the actions of the PCs to liven the world, to make it less terrible. It comes when the players first get given the description of children laughing and people singing, because of their actions. The bleaker the beginning, the more rewarding those moments of joy.
Mechanics wise it is fitting for players to slowly lose what made them great, that they would only be a few steps behind the world they lived in. But telling players 'your only going to get worse' is very off putting for most. Perhaps there could be a system that as you lose your 'mystic traits' you gain mundane ones representative of the skills that were replaced my magic. As the wizard slowly forgets his magic (or has it leeched away from him or something) he figures out how to replace it, men have relied on wizards controlling the weather for hundreds of years, but before that we had irrigation systems that provided our grops with all the water they needed, brother I will show you how.
Of course the route you described, the everyday miracles, also absolves this problem somewhat. The players will have a finite resource with only some very specific ways of regaining it, they would more like look for adventure to refuel themselves. Perhaps there could be some sort of negative effect for those who manage to horde too much 'magic.' They become out of touch, the new generation become jealous wishing to steal his power 'eat the oni's heart to gain his strength' that sort of thing.
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