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The GoodGTA III led everyone to the alarming conclusion that some of the most entertaining moments in gaming could be derived from recklessly driving a car through a virtual 3D city and performing various sorts of crimes. It gave birth to a new genre, which continued to evolve and became one of the most popular ones of the century's first decade and beyond. It was, above all, a fantastic concept that impressed with its seeming simplicity and the amount of resulting fun.
GTA III also emphasized storytelling more than its top-down predecessors. There were cutscenes before missions, and the main hero had at least some motivation and involvement in the narrative. But of course, this aspect was still quite rudimentary. GTA III was pretty bleak when it came to writing and characterization. It was not until Vice City when the series finally found its own tone that has stayed with it ever since.
Vice City adds plenty of personality to the GTA formula. It is impossible to like Tommy Vercetti, but at least he is a real character, not just a nameless, silent thug who drives around and kills people. Tommy is not stupid, his cynicism is on par with the world that surrounds him, and his "moral credo" becomes quite obvious from the game's dialogue. Needless to say it is much more interesting to control someone with a personality, no matter how dubious this personality is.
The dialogues in the game are brilliant, and are honestly nearly as enjoyable as the gameplay. Excellent voice actors deliver witty lines that bring plenty of dark humor and satire into the narrative. There are interesting situations, conflicts, and even plot twists. Vice City may not be the epitome of storytelling, but it is a giant leap compared to its predecessor.
The 1980's are depicted in an intentionally goofy, parodied way in the game. The radio stations are more funny than ever, and the whole environment is more colorful, more attractive than the rather grim Liberty City of the previous game. There are plenty of comical nods to Scarface, and a generally cartoony approach to the mafia theme, which is more evident and self-conscious than in GTA III.
You are no longer restricted to cars in Vice City: motorcycles can now be hijacked as well. It may look like a small adition, but in reality it adds a whole lot of fun to the game. Bikes have their own distinct physics and sense of speed, and alternating between them and cars makes exploration and missions even more enjoyable and varied.
These are the improvements that Vice City demonstrates over the third GTA. But it does more than that: beside improving a lot of things, it preserves literally everything that was good in GTA III. There are no omissions at all; if you enjoyed the previous game, you'd find it impossible not to enjoy Vice City. In fact, this game almost renders its famed predecessor obsolete: there is nothing in GTA III that isn't found in Vice City as well.
I've heard people criticizing Vice City for that, saying that it was basically an add-on, a mod that completely relies on what was achieved by the earlier game. Maybe, but who cares? Vice City contains such significant improvements that it doesn't really matter if it owes its concept to another game or not. Ultima VII Part Two also used the gameplay and the engine of Ultima VII, while being much more than just an add-on.
The BadThere is one thing I don't like about Vice City: it's cynical. Cynicism is one view of life I try to stay away from as much as I can. Humane attitude and warmth is something I'm always looking for in games. One might argue that it would be foolish to look for warmth and humane attitude in a game about criminals; but the examples of Getaway and Mafia prove the opposite. Vice City is a brilliant game, but it doesn't touch you in any way. There is no character you can care for in the game. Everyone is either vicious, corrupted, or psychotic; many are all three at the same time. It's very hard to associate yourself with Tommy Vercetti; he is evil in an indifferent, cold way, without any appealing or redeeming qualities.
The rest is nitpicking. The main story is not very long, and also not particularly exciting, though it does have its moments. Before the final mission there is a set of rather boring "reputation-building" missions that I felt could have been replaced with something more interesting. And of course, the next GTAs beat Vice City in pretty much everything (although some people would argue that San Andreas had too much unnecessary stuff in it). I played San Andreas before this one, and I'm pretty sure it spoiled me.