A theme, almost an “unwritten law” or “sacred cow”, of typical MMO design that I have been contemplating for some time is the prevalent philosophy of “winner take all”.  Particularly in combat, but in other systems as well, there usually is a highly discrete “victory” state which must be reached to achieve a reward.  Doing 99,999 points of damage to a 100,000 hit point creature nets you nothing; essentially, only the 100,000th point counts.  Conversely, there is also a highly discrete “loss” state to be avoided.

A few games have experimented with minor intermediate rewards, the most obvious examples being skill-based systems like UO and Oblivion.  AC had a similar mechanism granting small amounts of XP per action, in combination with a more typical XP-per-success/victory mechanic.

What I keep going back and forth on is, is the winner-take-all philosophy a necessary/desirable component of this type of game?  Is that a crucial component of the enjoyment factor, or can other, less absolute systems be successful as well?