I just watched a keynote speech by the developers of the game Biochock at Develop 2008 Conference. Here are some of the things that I found interesting:
It's hard not to find that title pretentious, but it their best way of describing how the world of Bioshock was created. Everything in the game happened for a reason, so if there is a corpse in a room then they thought about how that person died, what they were doing and what would have happened to the objects they had. E.g. if they were reading a magazine and drinking a soda then the magazine will be on the floor with the spilt drink.
The difficulty is in telling a story without using cut scenes or voiceovers (which always seemed to me a sign of failure) by building characters from evidentual artifacts or by being part of scenes that explain what is going on. In fact, if there is a strong underlying story then this is the game.
They had the luxury of time and money. This meant that the production schedule was different, they were allowed to make mistakes and change direction.
Their opinion of a AAA game is that you'll be incredibly scared on the release day. You should never be 100% satisfied with any of it and b constantly revisiting and refining.
They new that it would be set in an underwater complex very early on in the design because you need to 'trap' the player in a constrained environment to give a claustrophoic horror atmosphere.
The writer was very integrated into the process. It was not a case of writing a script, bunging it to the developers and letting them build it. There were daily sessions discussing current functionality and thinking of changes and riffing off of it. The team sat together in an open plan area, separated by project and not by function.
Develop 2008 Conference Keynote: "Bioshock and Awe: Immerse the Gamer in an Alternative World Without Drowning Out the Gameplay" - Ken Levine, Bill Gardner, Noah Wells, Chris Kline; 2K Boston