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Opinions are divided on quest compasses, with some seeing them as a useful convenience for players that want to get to the actual meat of the game and others seeing them as yet another sign of the dumbing down of CRPGs. If nothing else, this Gamasutra editorial from Felipe Pepe (who certainly belongs to the second camp) will provide food for thought for both camps, as it does a very good job at outlining the circumstances that ultimately made this UI helper feature as widespread as it is today.
That's a Wayback machine capture of Curse.com in 2009. Yes, those are 36 MILLION downloads, with an average of 40k downloads PER DAY! Of Quest Helper alone!
For reference, the most downloaded mod in all of NexusMods' history currently has 18M downloads. That's less than HALF of what Quest Helper got just from 2007 to 2009.
So... it was kinda popular. More over, it appeared and grew popular right as WoW's audience increased... Note that I'm not implying correlation, but rather that millions of players got into MMO's guided by a giant arrow over their head, zip-lining from quest to quest.
"Follow the arrow" addons began in early 2007 and Blizzard resisted the pressure until December 2009, when it incorporated a quest tracking system into it's own UI (Patch 3.3.0). WoW was at its peak at the time, with 12 million players - all now following a quest compass.
(WoW's audience only declined since then - feel free to imagine a correlation here. I sure do.)
In the years since, WoW's quest tracking system was continuously expanded, and now it even automatically sort quests by proximity. All for the sake of convenience.