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You want to tech your kingdom against the mission you're playing, that's what these 3 races are for.
I use elves the most in the epic quests for the gold, but admitedly, it's more for comfort, since even though each marketplace costs more to build, their generation means that building 2-3 will be enough to power through any epic quest, and 5-6 can do deal with the demon without elves. It kinda makes me feel bad for the royal gardens and trading post... As far as fighting goes, I always end up seeing them burn their healing potions and berserk less than rangers , and you cant really get hordes of them with more buildings.
I used to love dwarves, but their ability to tank magic is not put to the test in most levels, so their main feature doesn't justify the time needed to get them. They are also pretty greedy, but warriors of discord and barbarians will go after the same reward flags as them. Balista are nice, but I seem to only use them on places with a grace period before the tough monsters come out like the spires of death.
I appreciate how well they all fit into roles; establishing quickly, economics, and hunkering down for the long haul, but the first one is the usually the biggest challenge to overcome and can't partially be covered by your human charachters/buildings.
Gnomes got better in NE with their upgrade to Champion but it's not enough and Dwarves are too slow to get unlocked and too expensive and slow once you have them.
Thanks to The Northern expansion, these guys got an amazing jump in usefulness once they hit 8 and become Champions. Now you've got nimble, incredibly hard to hit fighters. I've seen them take down Minotaurs, Dragons, and even those damnable Stone Golems before. About the only weaknesses they have are vulnerability to magic and their glass-cannon HP levels.
Elves are an interesting choice. You immediately get double your Marketplace economy, and if you've got Trading Posts producing caravans it just gets even more delicious. Elves themselves aren't too bad either. They're like the one-night stand of a Ranger and a Rogue. They're easy to motivate like Rogues, but decently ranged and nimble like the Ranger. They're moderately resistant to magic too. However, only getting 2 Elves per Bungalow hurts. Furthermore, their Lounge and Gambling Hall (I've never known anyone to go Elves and not go Rogue's Guild for at least the poison) hurt your profits.
However, the Lounge can be destroyed by an attack flag and will not rebuild itself. Assuming you're the nefarious sort to save-scum, you can take advantage of the Gambling Hall and potentially mine unlimited gold off of it. If you're more of the virtuous sort, a well-placed bounty flag takes care of this structure too. Whatever choice you make, you're going to have coins trickling out of your ears from all the gold you'll be making--gold that can be used to liberally spam spells, build new structures, research, or make it rain on your heroes' heads so they can buy all that phat lewt you're offering them.
Last but not least we come to Dwarves. Dwarves are the hardest to get to, as they require a level 3 Blacksmith and a level 2 Palace. Their structure is something like 1136 thanks to the discount but still un-Godly expensive. You only get 3 of them to a guild and at first glance they're basically a more expensive warrior. Then you notice that they have a whopping 70 resist. Once you factor that into their Warrior-esque stats they're not that bad. Vampires, Occuli, Black Phantoms, Wizards, Priestesses, Ixmil's Fortress, and even the Spires of Death themselves will pose little threat to these hardened turtles.
However the best perk by far is their automated defenses. Ballista Towers cost 950, which is more expensive than your first Guardhouse or two but the price stays static. If memory serves me properly, it has at least the same health as a Guardhouse if not slightly more. I know for sure that it's bolts are far more effective than the Guardhouse arrow and even a Veteran Guard combined. True it doesn't serve as a mobile drop-off point for Tax Collectors and Peasants, but with a perimeter of these established your kindgom is quite safe and nothing makes an Inn/Trading Post more secure than a pair of these babies handy. The Dwarven Fortress itself can serve as a super Ballista Tower and, since it draws aggro from monsters, its Dwarves will get in easy exp from monsters too focused on the fortress. On maps were you expect to get hit hard or constantly, you could do far worse than having these handy. Hell you can even build these around "boss lairs" and give the emerging boss something to greet.
Even Gnome Champions go down against Ice Dragons and Greater Gorgons (like in Valley of the Serpent) and if you're playing with settings that include them, you're gonna need gold.
And you don't really need Dwarven Ballistae Towers to form a defense because your heros should be going on the offense and seek and destroy the monsters and lairs anyway.
So while "fun to have", I think Gnomes and Dwarves are really just extra and Elves are pretty much the "must-have" in any scenario.