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I do all my killings sniping so I don't get MM or Institute mad at me.
My favorite faction is still the minutemen since it's more independent.
So no, siding with the Institue is NOT good for the Commonwealth, no matter what the eggheads there tell you. There isn't even a "terraformation" section in the Institute.
As the Director you have little to no power. Remember the meeting where the Directorate give you a choice of either producing more synths or more weapons. They had already decided on those two things.
All you could do was make a choice out of those two. There was no option to say: Let's kill off all synths, share our resources with humans and let our scientists work on improving life in the Commonwealth.
I think we would all have chosen that option and that would have been the good ending.
I have also chosen the Railroad just for the achies and now Minutemen comes next. I also want the Railroad be destroyed because they are just so ridiculous, what kind of person thinks machine as a human? They should just stick focus on toasters and coffee machines...
I would like to destroy BoS and Railroad while keeping Institute well and alive. But I also do not want to see any noob-generation synths in Commonwealth after finishing the story. I wish there was a dialog option to keep them inside the Institute when talking to some dude but no...
http://24.media.tumblr.com/tumblr_lr6scujCCK1r2jkz6o1_500.gif
You are so wrong with the last part. I would instantly nuke the Institute if I would have to do that. Or stick with the weapons. Maybe that happens in a DLC.
Then I started a new toon, got the location of Diamond City from Mama Murphy, bailed out on the Minutemen and started tracking down the Institute. Now, with their support, I have exterminated the Railroad, BoS and every minuteman and whiny settler I could find. Couldn't be happier even though the ending was a bit to cheesy for my taste. I swear I could hear the world smallest violin play in the background, but hey, good riddance.
The risk of a possible synth uprising is a problem for future generations..
Siding against the Institute affects several things, from the really minor to bigger-picture stuff.
First of all, and probably most obviously, siding against the Institute means you are never able to enter it again. Which entails a number of things... several minor quests become impossible to finish if not done before siding against them, the Synth companion is not an option, one or two vendors/merchants are lost, and some nice junk is lost (Institute junk can sometimes be sold for a bit more than normal junk, and so forth).
Secondly, synth Shaun (the child-robot) can craft a special weapon for you after adult Shaun reprograms him to recognize you (which AFAIK doesn't occur until the Institute ending, so you can't do the errands for synth Shaun while in the Institute prior to siding with them). So it would lock you out from the special weapon (which is an energy weapon of some sort IIRC).
Third, you lose a radio station when siding against the Institute... classical radio goes off-line, as it was the teleporter signal all along (the logic of this plot point is strange, but w/e). It might be completely fine with you that this happens, but if you liked the classical music, then choosing any faction other than Institute means you lose that station.
Are those incentive enough to side with the Institute? Well, that's personal preferrence. And at least some of the minor quests that require access to the Institute can be done before having to side with or against them.
It's personal preferrence, really.