I'd like to describe the combat in CoI as "Tactical Turn Based". It's a combination of pre-existing systems, but the two most prominent are DoS2 and Etrian Odyssey. Though with Etrian Odyssey, I didn't know about it's existence till way after the system had been solidified. On paper everything is very simple, however, compared to your typical JRPG there's a considerable amount of depth.
Each side(Ally, Enemy) is comprised of a 3x2 grid. The Vanguard and Rearguard are fundamentally different. The Vanguard focuses on melee attacks and defense/aggro, while the rearguard focuses on support and damage. This balance is enhanced by a permanent buff that's active from the start of combat.
There are 12 Damage Types in the game:
Physical - Slashing, Piercing, Bludgeoning
Magical - Terrestrial, Fire, Water, Aether, Lightning, Arcane, Holy, Dark
Special - Unstoppable
Each of these damage types(minus Unstoppable) has a corresponding resistance. Arcane magic is simply atypical magic. It can quite literally be anything. Your gear can offer Armor(Physical) and or Magic Armor(Magical).
Actions There are 4 actions within combat - each of which requires 1 AP. Normally, you start each turn with 1. For ATTACK, your options depend on your weapons capability. You can either Slash, Pierce, or Bludgeon.
Your SKILLS are primarily determined by the weapon you are wielding. There are currently 66 skills in the game. CoI features Styles rather than classes. There are 9 Styles in total. Each style has 3 trees, and each style also has a resource. This resource can be used to subvert the typical Energy cost. Energy determines everything you can do in CoI outside of dialogue.
Physical*
One Hand - Slash/Pierce/Bludgeon | If you aren't wielding a shield, you can cast spells you've learned
Dual Wield - Slash/Pierce/Bludgeon
Two Hand - Slash/Pierce/Bludgeon
Archery - Single/AoE/Elemental
Magical* - Single/AoE/Creation Keyword
Terramancy (Te) | Elemental reaction with Burning - Ignition
Pyromancy (Fi) | Elemental reaction with Oiled - Combustion
Hydromancy (Wa) | Elemental reaction with Conductive - Shock
Aethermancy (Ae) | Can spread Poison and cause Hypothermia to Wet targets.
Electromancy (Li) | Elemental reaction with Wet and is the only magic that can Crit - Chain Lightning
Every single skill in CoI will feature a Morale Bonus. Morale determines the flow of the entire game and is obtained in a multitude of ways. Depending on your morale, your abilities will be further enhanced. Most bonuses simply affect the numbers. While others are a bit more...chaotic.
CREATE SPELL as the name implies creates a spell. This system doesn't care about the weapon you are wielding, once you've learned the Keyword, you can use it to cast the spell. As of now, the system is very simple. Every potential spell is an attack. However, unlike elemental Skills, creating a spell allows you to combine multiple element types at once.
With the elemental reaction system, on top of resistances - this allows for some interesting synergies. Though it is a bit of a fluff number, with the keywords planned, there will be 3875 possibilities.
ITEMS related to combat can either restore HP, or grant in combat buffs. As to not take away from the tactical nature of the game, combat items will be limited.
Combat feels very alive. Due to the relationship between the narrative and combat, optimizing your game-plan is essential. Since you can have 5 other allies, there's a lot of room for interesting strategies. It's extremely inefficient to brute force through combat. Unless a solid plan has been set/crafted - trying to brute force will cause your overall experience to be less than stellar. Your morale is a gauge of your capability. If you fail to properly lead your party, that'll cause your morale to lower.
When morale is low, your companions slowly start to become unstable. Instability, is often the root of insanity.
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