This question was recently asked in our Linkedin group. The concept artist and game designer who asked the question added that there are two kinds of story telling in games.
According to him, there are games with well developed characters such as "Resident Evil", "Final Fantasy" or "Heavy Rain" and games whose characters simply constitute a means to explore the game, such as "Super Mario", "Zelda", "Sonic the Hedgehog" or "Rayman".
He even went further, saying that making a game begins with a "white version", in which a character can just be a box, sphere or triangle. Even at this stage, the game is playable, despite the lack of actual characters.
A storyboarder and animator suggested that character development for games had more to do with creating licensing opportunities than fulfilling an actual narrative need.
With regard to narrative structure an IP developer made a general point about character development for games, "The strength of interactivity in terms of engaging the player is that the player directly influences or determines the outcome. Linear narrative structure and its characters differ from such a setup in one major way... the end is set. This simple fact has profound consequences for character development. Not having a set end, but one that is influenced by the audience/players must, in my mind, also have profound consequences for character development".
In traditional media the backstories of lead characters are vital for the narrative. Do you think that this is different in games? Why not join the discussion... here.