The genre was rebuilt after 1995, but it looked very different. The companies and franchises which had dominated withered away, replaced by the ones we know now: Fallout, BioWare, and Blizzard. All these started shortly after 1995, and the only residual series from before, The Elder Scrolls, squeaks in with its first installment in 1994. So what changed, and why did it change?
The chief contributing factor was the rise of the compact disc for storage. Games comprised of a dozen ungainly 1.5 megabyte floppies were growing more and more common, so the CD, with 500 megabytes, was a godsend (or so it seemed). All the other technological advances: better sound and music, voice-over, 3-D polygonal graphics, full-motion video, etc, could be used with CDs. This made games bigger -- but it also made budgets bigger, teams bigger, and development times much longer. Role-playing games and their developers struggled to adapt.
While team size and budget weren't necessarily seen by gamers, delays between games were. Ultima had released roughly one game every two years, but Ultima IX, released in 1999, came a full five years after Ultima VIII. The same was true for Might & Magic -- five years between its fifth and six installments. Wizardry had a nine-year wait after 1992's Wizardry VII: Crusaders Of The Dark Savant. Even the newer hits, like Lands Of Lore and Betrayal At Krondor, had significant gaps before their sequels (four and five years, respectively).
But those were only some of the most famous games. The bigger issue is that the bottom completely fell out of the lesser-known games. Before 1995, role-playing games, flight sims, and adventure games were the norm for PC gaming, but they were supplanted by first-person shooters and real-time strategy games as the default games you see on the shelf.
For example, SSI, the company that owned the license for Advanced Dungeons & Dragons video games, released around 30 AD&D games between 1988 and 1994. Thirteen of those were part of the "Gold Box" series of games that had almost identical engines and narrative style. We sometimes complain about Call Of Duty putting out similar games every year, but the Gold Box games came even faster. But SSI lost that license, with the last major release in 1995, and a consistent amount of good-to-great (though rarely earth-shattering) AD&D games disappeared from the market. So too did non-licensed games that are barely remembered today -- Albion, The Magic Candle series, Phantasie?
At the time, this seemed to indicate the near-death of the genre. 1995 and 1996 were certainly dark periods, with only Daggerfall and Diablo -- barely counting with a December 31st release -- making 1996 look better. The numbers never came back, but the Hall Of Fame-level games did: Fallout in 1997, Baldur's Gate, Fallout II, and Might & Magic VI in '98, and so on. (One of the few things that interests me about Kingdoms Of Amalur: Reckoning is that it seems like an indication that the RPG is popular enough again to start seeing generic games in that genre, instead of shooters or action games.)
But the games were different. The model had almost completely changed. In many RPGs prior to 1995, the model was simple: You created a party of four to six characters by building each one from scratch, and they hacked and slashed their way through the bad guys until the game was finished. After 1995, only a handful of games -- usually sequels, like Might & Magic and Wizardry, plus the Icewind Dale throwbacks -- continued that model.
It was replaced by the model still used today: the lone player-created character, with everyone else in the game, whether they join or not, a non-player character to some extent. Sometimes the player character is almost entirely alone. In The Elder Scrolls, Diablo, and the initial Fallout, the character's journey was almost entirely solo, though later sequels included more in-depth companions.
But the more memorable model is the one used in Baldur's Gate. The player builds the central character, then recruits a party of chatty non-player characters to join. Indeed, BioWare's success seems to be largely related to the power of their party members, from Minsc and HK-47 to Alistair and Garrus. Many Obsidian games (and Planescape: Torment, made largely by the designers who went on to form Obsidian) use that same kind of charismatic party member model to their benefit.
Two other major changes in the form came after 1995. First, the morality system so common nowadays was built almost entirely by Fallout and Planescape: Torment, and solidified in Knights Of The Old Republic. Second, the slow-paced, turn-based tactical combat that was generally the default was largely replaced. Many switched to real-time combat or combination real-time/turn-based, but even turn-based games like Fallout were generally faster-moving than Golden Age games. The slow tactical games tended to fall into niches, like Jagged Alliance II, or they were throwbacks like Wizardry 8.
The amount of information also changed. Early RPGs were giant mazes with no maps, and the player mapping the game on graph paper was expected (some games even came with the paper). Quests especially changed -- what was a single overarching quest in a manual became a few side quests to write down on paper, which became an in-game journal system in the mid-1990s. From there it was a simple leap to in-game arrows pointing in the right directions, with maps automatically built, riddled with information and quest markers. More space due to compact discs helped with these things, but they also came with a general computing and specifically gaming model that interface and information should be as easy for the player to access as possible -- partially, the difference between Windows 95 and MS-DOS. Technical innovations are only partially responsible for these changes. The shift towards faster-paced games can be attributed to the rise of real-time strategy games and first-person shooters, as well as the trickle of western RPGs from computers to consoles. The influence of the former can be seen in Baldur's Gate's Warcraft-style interface, the latter in the Elder Scrolls' graphics and combat.
One major and obvious technical innovation altered the genre a great deal: widespread internet use. The static-world RPG became plausible, with Ultima Online acting as a blockbuster that followed in the steps of smaller-scale games like the original Neverwinter Nights, Meridian 51, and The Realm. Games like Diablo also indicated a niche for tabletop-style small parties, which Baldur's Gate was designed around. Indeed, the one-player-character model I described above is something of a happy accident from BG's development. It was designed to be a seamless multiplayer or single-player experience. The different party members were surrogates for potential online comrades, but their appeal was so strong that the style was maintained, even for purely single-player games like Knights Of The Old Republic and Jade Empire.
The Ultima series is a partial exception to virtually everything in this piece, in that it tried to do all of these things before the others: a single player character with a party of others, turn-based combat changing to faster pacing then real-time, exploration of ethical systems, multi-player innovations, first-person combat, and dramatic technological improvements leading toward a more film-like experience than a novelistic one. (Sadly, it was also ahead of its time in that its studio was purchased by a major publisher and reduced to a shadow of its former self.)
That focus on film-like qualities is one of the great unifying aspects of post-1995 role-playing games. The technology that allowed for more complicated music, wide use of voice actors, and especially videos and cutscenes changed games of all genres, including RPGs, into using visual media like film or television as an ideal. RPGs and adventures had been book-oriented, while flight sims and sports games looked for realism. Adventures and flight sims lost almost all their popularity, and sports games thrived when they started looking like television. RPGs survived by using film as a model -- one need only glance at the intentional visual parallels used by Knights Of The Old Republic to reference the Star Wars films.
Maybe you prefer one half of RPG history to the other, perhaps calling one side "boring" or the other side "dumbed down." I don't -- I probably like both halves equally, Ultima about as much as Fallout. I'm far more interested in why things are the way they are. And in order to understand the difference between "old school" and "modern" RPGs, you have to understand why the genre broke in 1995, and what was rebuilt.
Rowan Kaiser is a freelance writer currently living the Bay Area, who also writes for The A.V. Club, and has been published at Salon, Gamasutra, Kotaku, and more. He still occasionally finds Ultima VI Moongate maps and mantra notes when he visits his parents' house. Follow him on Twitter @rowankaiser.