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First of all, I do not see an AOS TW game coming out anytime in the immediate future. First of all, there's still much life in WH3 with tons of dlc and update possibilities, not to mention CA is probably working on their next historical title (And there's a possibility we'd probably get a 40k TW, which is likely more heavily requested).
Now that being said, I think this is likely a future game since CA and GW are likely to pursuit this joint venture after WH3 has run its full course of content.
What is Age of Sigmar?
Age of Sigmar is the successor to Warhammer Fantasy Battles, after the End Times destroyed all of the world. GW wanted to update the game with a new set of rules, have a chance to rename their lore (for copyright), and believed the intial fantasy game was failing (Whether or not it was is up to debate, but they are going to bring back the old Fantasy content as Old World)
Having survive the end of the world and his epic battle with Archaon the Everchosen, God-King Sigmar set out to rebuild the world alongside several other gods he found, including Gorkamorka (the fusion of Gork and Mork) and the recently newly ascended eleven dieties, including Teclis, Tyrion, Arielle, and Malerion (formely Malekith). He even sided with the nefarious god of death, Nagash, for the promise of all the mortal souls for his realm.
They rebuild the shattered world as the Mortal Realms, seperate planes of existence connected through magical gates. The new pantheon was set out to battle the legions of Chaos, their common enemy. However, it broke apart when the dieties' own plans and actions divided them (such as when Sigmar claimed the souls of champions to turn into his Stormcast Eternals, breaking his promise to Nagash).
Now four different loosely connected alliances fight for the future of the Mortal Realms: Order, headed by God-King Sigmar and the Aelf pantheon; Chaos, the followers of the foul gods of chaos; Destruction, the monstrous brutal forces of Gorkamorka; and finally Death, the unliving thralls of Nagash.
Why Would Age of Sigmar work as a Total War game?
This game would fit for the same reasons Fantasy worked for TW. True, the alliance angle does sound like the fight would only between four different factions, until you remember they are not completely united. There is always in-fighting and such, and the only reason they don't go to full war is because they hate the other Alliances more.
For example, Morathi and the Daughters of Khaine recently took control of Anvilgard, a city of Sigmar, and renamed it Har Karon. The Stormcasts marched in to take it back, but apparently when Celestant-Prime spoke to Morathi, she apparently made a deal with him to keep the city, though we do not what she offered.
Meanwhile, the Slyvaneth basically hate everyone who goes into their forests and are quite brutal and sadistic to those they capture. They will fight alongside other armies as long as they stay out of their realm.
And it shouldn't be a surprise, Chaos and Destruction are always fighting amongst themselves. Death is kind of more united than the others, but they do fight for Nagash's favor.
How Would this Be Different from the current TW: WH games?
This would play very similar gameplay wise, controlling vast armies on a field in active real time battles. There would be all new factions, though some would play very familar to many of the factions in Fantasy now.
This game can add some new details for example that could twist up combat and such. For example, Age of Sigmar allows for the use of terrain and shrines on the battlefield that can grant boons to their faction and debuffs to their enemies.
For example, the Mawtribe Ogors (Ogres) drag around their great mawpot into battle. In the tabletop, the Great Mawpot gives buffs to ogor spellcasters and can restore the health of units in its proximity. However, each time its used, it can only be refilled by killing an enemy in its range. In a TW game, it could do the same, having a limited supply of healing stew that fills up as enemies die in its range.
In addition, the map designers would have the advantage of not having to worry about connecting the different regions in a fitting way, unlike the current TW game. This is because the different realms are not physically connected and thus they can focus on creating a well-sized and designed map without worrying about borders. To get to a different realm, an army must travel through a waygate. This also means if an area isn't ready yet because there's no real faction presence there yet in the game, it can be put aside and added in easily later.
What Would Be the Factions? Which would be the base and which would be set for DLC/FLC?
Ok, now this is where it gets a little up for discussion. Obviously, to make as many fans of the game happy as possible, all four alliances should have playable factions in the base game. However, putting every faction in the game would cause some imbalance and such as Order is almost twice of the size as the other three combined. There's also be too many legendary lords to start with, so I would think this should be the starting goal.
17 Factions/LLs. (2 factions for Order, Destruction, and Death, and 5 for Chaos. Two LLs for each former and one for each faction of Chaos)
Seems big, but I think its doable, especially as time goes on.
This is who I see as the base game:
Stormcasts. We have to start with the Stormcast Eternals. These golden boys and gals are the poster children of AOS. I would think their starting LLs should be Celestant-Prime (a slow but powerful spell warrior) and Yndrasta (quick and agile). Celestant-Prime could start in Azyr while Yndrasta starts in Ghur.
Slyvaneth. After all the thoughts I had, I thought the best option for the second starting Order faction should be the Slyvaneth. This will be because there will be factions fighting in Ghur, and it just makes it easier to put them in. They would be fighting Nurgle and have an uneasy situation with Yndrastra.
Orruk Warclans.(Greenskins/Orks). These guys are pretty much the face of the Destruction faction. Now the thing is, I thought about if the Warclans should be one faction themselves or be divided between the different subcultures (Iron Jawz, Krule Boyz, Skull-Smashas). The latter would give destruction more options, but between them and the Gloomspite Gitz, people may get tired of green skins. I decided they would work with each lord having a specific clan focus, and only be able to recruit the other types when certain objectives are completed (like confederating the others). So, my thought for the starter lords would be Gordrakk, the Fist of Gork (Ironjawz) and Gobsprakk, the Mouth of Mork (Krule Boyz). Godrakk would be your basic brutal warrior who focuses on the Ironjawz units while Gobsprakk is a spellcaster whose strength is the Krule Boyz.
The Mawtribe Ogors. Let's face it, these guys are the only other choice to avoid "green fatigue". Gloomspite should come as dlc, and unfortunately, unless CA really invests in them, the Sons of Behamat don't offer enough for a full army beyond "Big stomping giants" for a TW game. I'm not sure who should be their leaders, but one should be a Gutbusters focused one (basic ogre gameplay with walls of meat and clubs and ranged options) and the other Beastclaw Raiders (high manuerability with beast mounts, allies, and tons of ice magic). They can use both types of units, but have better focus on their specific armies.
The Nighthaunts. These guys are the most commonly used of Nagash's army, and thus I think they should be a base game death faction. These specters would play as magical high speed units, but as not as sturdy as many other factions, and like other Death factions, have no real artillery. Their leaders should probably be Lady Olynder (since she's their Mortarch) as a spellcaster and Awlrach the Drowner as a high speed, melee assassin.
The Ossiarch Bonereapers. These would be the opposite of Nighthaunts and would fit perfectly for the base game with limited space. They would play as slow-moving, but highly defensible warriors. These skeletons would have slower spells, but more about buffing themselves rather than the Nighthaunts' more damaging ones. As for their starter LLs, I would suggest Katakros (as their mortarch) and either Arch-Kavalos Zandatos or Arkhan the Black (which would be good for people who want to play someone they reconize).
I decided these two have the most ease to put in; Soulblight would work better as a faction pack since they have so many different LLs, they would fit better in a whole pack dedicated to them.
Slaves to Darkness. We need the undivided faction, who play on a high focus on mortal warriors and monsters, similar to the WoC in the game now. And of course, their first leader should be Archaon the Everchoosen.
The Maggotkin of Nurgle. Like in the current game, the Maggotkin should be all about surviving all the crap thrown at them until their diseased forces wear the enemy out. Since they are the most famous figures of the Maggotkin and should have priority with only one slot, the Glottkin should be the Maggotkin's starting legendary lord as a hybrid warrior, spellcaster, and monster.
The Blades of Khorne. Your basic bloody bersekers with no magic, and just plain slaughtering of the enemies through sheer might and charging forward. Their starting lord should either be Valkia the Bloody, Khorgos Khul, or Skarbrand.
Hedonites of Slannesh. The debaunched followers of Slannesh who focus on enslaving their opponents through corruption and depravity as well dominating the field through enpowering themselves and weakening their foes. My first choice for their LL should be Prince Sigvald, though Gutos would be a second choice for me.
The Disciples of Tzeentch. If you want spells, manipulation, and mutations, then this army is for you. The only LL I can see for this army is Kairos Fateweaver, who'd probably play similar to how he does in WH3.
So that's just my take on this. What do you guys think? Feel free to share your thoughts and own ideas.