Are you frustrated with Oblivion's ridiculous loot tables and NPCs that scale to your level? Do you long for the days of yore, when you could be ground into a pulp by accidentally running into an Ogre before your character was powerful enough to handle it? Do you pine after the delicious feeling of complete triumph when your fireball-casting, armor-encased demi-god of an adventurer ran into a group of low-level bandits and scattered their body parts across the forest without so much as a wink? Or maybe you're looking for more weapons, like pole arms? Maybe that consolized UI has your mouse hand a-twitching with nerd anger, or perhaps you simply want the ability to walk into and out of cities without dealing with loading screens. If any of the above applies to you, then I suggest you read on and learn about some of the mods that turn the latest iteration of Bethesda's controversial and highly disappointing RPG into one of the best releases in years. I'll present the mods in problem-solution format, so gamers that are dissatisfied with any element of the game can easily find what they're looking for.
Problem: I've just bought the game. I'm about to start it up.
Solution: Wait! Hold on a second. Vanilla Oblivion has some nice bugs and is missing lots of cool stuff to which a simple read-through of this article will alert you. First off, make sure you get the newest patch from Bethesda's site, as it fixes lots of problems with quests and weird graphical errors – the basic stuff. Also, most mods are based on the patched version of the game.
Grab the unofficial patch which fixes over seventy things left by the official patch, including crashes-to-desktop (still more common than I'd like, even with the patch installed), quest errors, and other sundry bugs.
Also, if you're playing Oblivion only a couple times a week and you'd like a single download that has some cool stuff and fixes some of the more glaring errors that Oblivion's developers made, get Obscuro's Oblivion Overhaul. This mod addresses the main problem (outlined below) of scaled monsters and loot, and it adds a bunch of other cool things like new quests, enemy types, and even AI. If you're only going to get one mod, grab this one. If you're an enthusiast like me or if you want something more than just the basics, then read on.
Problem: I'm level 45 and I'm fighting common highway thieves who are level 40 and are wearing gold-plated armor and using magical weapons. This is ridiculous!
Solution: Oblivion's scaled loot tables and monsters are probably the biggest problem that people have with the game. For those unfamiliar, the concept is that as your character levels up, the enemies (from bandits to bosses) all level up as well and acquire better weapons and equipment. It reaches the point where every monster in the game has the same high-level weaponry and armor, and the diversity of monsters that was a feature of nearly every single RPG since time began is replaced with gag-inducing monotony. At certain levels, you can't even find armor and weapons of lower class. That's definitely a problem. Luckily, there are tons of solutions.
Several mods take a quick-and-dirty approach to this problem, by altering the responsiveness of the game to your level. In other words, the game still scales the equipment and level of enemies you face, but the response is lethargic, so you hardly notice a difference. In general, the mods change the game to the point where it makes enemies and equipment within thirty levels of your own, meaning that you're bound to run into common thugs with clubs and iron weapons, as well as highly armored badasses that can smoke you with a single cough. A good example of this type of mod is No Obsolete Loot and Enemies.
Other mods hard-code limits for each NPC and monster, virtually guaranteeing a more realistic experience. Certain NPCs and monsters (guards, for instance) have their levels fixed and others simply stop scaling to the player's level after a certain point. There are a couple of good examples of this type of mod, including Real Oblivion, Sagerbliv's Creature Balance Fixes and NPC Static Level. I use NPC Static Level and it works beautifully, though may switch to Real Oblivion in the future since it's a more comprehensive mod. Note that only Real Oblivion addresses the equipment and weapons issue in addition to the leveling issue. For the other two you should use a separate item/loot mod, like Jarol's NPC Leveled Equipment Mod.
And then there is Random Oblivion. This mod takes an extremist approach to the level scaling problem by eliminating it completely. Instead, every monster in the game is assigned a random level and a corresponding set of equipment. Those puny bandits you run into just outside the sewers at the beginning of the game may be packing Daedric weapons, or maybe they're wearing fur armor and fighting with iron. Roll the dice and find out! I haven't tried this one and I probably never will, since quite frankly it scares the +2 shit right out of me.
Problem: Leveling is stupid.
Solution: People looking to power-level (max out their stats) or simply not screw up their character irreparably have some problems with Oblivion's leveling system. If you don't painstakingly increase your attributes with each level for maximum benefit, you end up missing out on a lot of HP or Magicka gains, in addition to screwing up your skills. Also, people thought that the system was a bit inorganic in that you had to increase stats manually, rather than having them go up like skills with continued use. Several modders stepped into the breach, and as a result we now have several more natural and altogether more balanced leveling systems to choose from.
Most of these mods change stats automatically when your character uses a skill that applies to that stat. For example, swinging a mace repeatedly increases your strength, casting spells yields a higher intelligence attribute, and turning enemies into pincushions with bow and arrow gives a boost to agility. Several mods exist in this vein: ranging from the more complex and hardcore (AF Leveling Mod and Seorin's Leveling System) to the more casual (Balor's Leveling Mod). I use Balor's and it works beautifully. You can just play the game and not worry about leveling or micromanaging stats at all.
Problem: The interface gives me nightmares. Why can I only see six items at a time in my inventory?
Solution: The answer to that question is because Bethesda had to develop for the Xbox 360 and PC at the same time. The solution is one of many minimized UI mods. BTMod is the most popular of these mods. In addition to increasing the amount of things you can see in your inventory, it also makes the map bigger and generally makes the UI more PC-friendly. This is pretty much the only one you need.
But, if you're crazy about your UI, check out Immersive Interface which allows you to customize everything about the interface to your liking.
Problem: Oblivion is too easy. I beat back the Daedreic hordes without even breaking a sweat.
Solution: Go outside more and stop playing Oblivion. You're obviously too good.
In all seriousness, there does seem to be a demand for a harder Oblivion. Adrenaline Oblivion caters to the hardest of the hardcore by spawning enemies in groups instead of one by one. This means ten to fifteen monsters in a single room where only three or five were before. It turns Oblivion into, hands-down, the most difficult game I've ever played. I'd say it's even harder than FarCry on the highest difficulty, but thankfully in this mod there are no Trigens.
Check here for an example. Notice the excellent corpse-humping technique at the end.
Problem: Oblivion looks pretty good, but I know it could look better.
Solution: This is a weird complaint, but apparently some people felt the same way since there are several excellent mods devoted entirely to the cruel taxation of your graphics card via new eye-candy. There are new night sky textures, new foliage, new rain and water effects, and even some good ol’ fashioned bloom and HDR that puts vanilla Oblivion to shame.
First off is the awesome Natural Environments. This mod adds thirty-seven new weather patterns, seasonal weather changes, reworked rain/snow effects, better-looking water, and even birds and insects. The difference is definitely noticeable.
In the same vein is the Sunlit Interiors Mod which alters the light inside a building according to the outside, so no more bright and happy light streaming through a shop window at two in the morning.
Turning to a more personal aspect of the game, everybody thinks the faces in Oblivion are crap, me included. Natural Faces adds new, high-res and better-looking textures for all races. It's nice not having to cringe in agony each time I have to talk to someone.
And what mention of graphical mods in Oblivion would be complete without a mention of the Nude Texture Topless Revamp, which, surprisingly, is not the most downloaded mod on The Elder Scrolls Source.
Problem: I want some new weapons with which to eviscerate my foes.
Solution: There are lots of mods adding new weapons to Oblivion, and most of them fall into the "hay guyz look at this awesome sword with flames and gold plating" category. There are a few worth downloading, though.
Jounk's Polearms is the only one I've gotten around to installing, and it rounds out Oblivion's armory with forty new pole arms of various types. There are staffs, spears, halberds, axes on the ends of long poles, and some wicked Darth Maul-type staffs with blades at each end.
Problem: The third-person camera is horrible. I'm getting sick watching my Wood-Elf run across the country.
Solution: I agree. It's a real mess. The solution in this case is very simple.
Problem: I miss the old Morrowind cities that you could just walk into. I don't like these separate loading screens.
Solution: Neither did I. So I tried out the Open Cities mods. So far there are several cities that have been given the Open treatment:
Enjoy!
Problem: How do I install all of these?
Solution: Sometimes it's as simple as double-clicking an .exe that automatically installs the mod for you. 99% of the rest of the time, simply unzip the mod to your Bethesda/Oblivion/Data directory, and on startup click “Data Files.” You should see a list of all the mods you have installed. You can then pick and choose the ones that you want to use for that session. This makes it easy to remove a mod you don't like or compare two mods without having to go through a long and convoluted process.
Problem: I want more!
Solution: I hope to write another one of these again in the future, so sit tight, and thanks for reading!

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