I'm going to start out with a lot of generalities here, and then work my way down to a more manageable level. By the end, I'm going to make some points about the games industry, especially MMO games.
First off, most of life is about success and failure. For most animals, and for early humans, it was survival vs extinction. Now for a lot of humanity, success and failure are defined more by profit and loss than life and death. As a side note, I'd say that's a basic and logical argument for us being at least slightly more civilized on an absolute scale than we used to be.
Obviously, we all want to succeed, and we don't want to fail. Ever. However, success and failure can not exist without each other. Our society - in a way - uses failure and loss to inform people that they are making bad decisions. And in order to get people to change their behavior, we punish them for failure, and reward them for success. However, when you take these methods to an extreme, or simply use them a lot, people react differently.
Some may stop trying anything, forgoing rewards in order to avoid punishments. In terms of games, this has shown up in recent years by players only wanting to play games where they are rewarded more and punished less, until you get some games that feel like one long sugar high; constant rewards, no punishments. Unfortunately for the players demanding for and playing those games, they feel less of a reward the more of it they get.
And that is the problem: players want only success and reward, and don't want failure and punishment.
The second topic I'd like to tie in is the little thing called a Skinner Box. Basically, it's a container housing a rat, that has various ways of rewarding and punishing said rat. Using it, Skinner could train various behaviors in rats.
Various parts of the world we live in can be described in ways linked to the Skinner Box. We all respond to stimuli, and when we learn that a certain behavior is linked to a certain reward or punishment, we either do that behavior more or less depending on the stimulus.
MMOs have been described as Skinner Boxes as well. In fact, they're probably a little better at that function than most people realized initially. To the point that a large portion of the player base has now been trained to have certain behaviors in games. For instance, most players are extremely risk-averse. If they don't have an obvious advantage, there's a good chance they won't do anything. They also tend to quit if they lose.
However, I think there's an opportunity here. We have these players who only want to succeed and be rewarded, and don't ever want to fail and be punished, and we have them playing in a Skinner Box that has been doing just that. Then we have a few people who came up with games that were Skinner Boxes that had more chances to fail and be punished. Obviously, that's not going to work if we want some more interesting action.
So how about disconnecting reward from success and punishment from failure? Expose players to a game that specifically rewards risk-taking, does have failure as a potential outcome, but doesn't simply punish that failure. I'm not saying "give a big new sword to anyone who dies". I'm saying "If someone just lost a battle, don't have them die, give them multiple interesting ways out."
Planescape: Torment is my idol here. Another game I've heard about that might go the more interesting route is Heavy Rain, though I don't know a lot about it beyond the standard description. In 90+% of games, MMO or otherwise, if you fail at a task, you die. Game over. Insert coin. Try again. Punishment. Many games over the years have worked to dilute this outcome, by making the game easier, or failure less costly. Some RPGs have some way of respawning with minimal penalty so that you don't have to reload from a saved game. But aside from the two titles above, they haven't made failure and death into a part of the narrative of the game itself.
When you fail at something in real life, what do you do? You might complain a little bit, say it wasn't your fault, blame somebody or something else, but at some point you have to do something different. Sometimes you can try again, other times you can't. When you can't, you simply move on. The story of life continues.
Say that forces are fighting for control of a town. One currently controls it while the other invades. If the invader is repulsed, he tries again. If he fails to much, he has to try something different, or retreat for a time to lick his wounds before trying again. Then, he succeeds, and captures the town. What about the defenders? Well, once it was clear they were losing, they made their own retreat. Where do they go? Into the countryside, where the invaders had previously been. The former defenders now become a guerrilla force, striking from a hideout, and gathering their strength and waiting for the opportunity to take back the town.
Basically, what we need is to start creating games that act as Skinner Boxes, but not to reinforce the obvious formulas. Instead, we need to teach players new behaviors, and new values. We need to teach them to value risk taking, not by removing punishments, but by making the standard failure-state lead to new and unseen opportunities.
Imagine fighting a monster in a cave, and if you beat it, you get some treasure, but if you fail to beat it, while fleeing for your lives, it knocks down a wall leading to a never-before-seen cavern leading to perhaps different creatures and treasure.
If you treat the player to enough unusual and inconsistent outcomes instead of "game over", you will begin to teach them to value risk and the potential for failure.