Not only have I never played with anyone that had read all of the famous Appendix N, but in my gaming history spanning over twenty-five years, I've played with very few who were particularly avid readers of fantasy, period. In my high school gaming group, a couple of the guys read some of the Gord books and other early D&D fiction, and maybe one of them read some Raymond Feist stuff. In my current gaming group, one of the guys is a big Tolkien fan, and another read a bit of fantasy in his youth including Conan and Elric, though that was years ago. The third guy I don't think has read any fantasy--unless maybe the Harry Potter series.
Anyway, maybe my experiences are atypical, but if the people I've played with are in any way representative, I was suspect most gamers don't come to rpgs with a strong background or even particularly strong interest in fantasy literature of any sort, much less many of the more obscure writers in the Appendix. Perhaps this is due to changing entertainment patterns compared to Gygax's day--certainly studies show that reading in general has decreased in every age group compared to 30 years ago, but I've noticed the phenomena before that trend.
So what gets gamers into gaming? Well mostly their friends, I'd guess. But why fantasy gaming, then? I assume this is tradition--"rpg" has mostly meant "D&D" over the years, so people had little choice. Many, perhaps most, peoples touchstones for how to conceptualize fantasy worlds and characters, then, has come largely from the game itself.
I should add here that I'm not placing any value judgement on this. There's no "wrong way" in my mind for people to enjoy rpgs, or to get into gaming, nor is there any purity test for inspirations.
But I find it interesting--particularly this: Do player's who've never read a fantasy novel, but came to tabletop rpgs from say, computer games, have different expectations or approaches to gaming, than those weened on Howard, Moorcock, and Leiber? How about those who got there from He-Man cartoons, or BOC albums, or those whose sole source of knowledge for fantasy is what they gleaned from the Player's Handbook and Monster Manual?
My gut reaction is that the conventions and culture of the game are the great leveller here, but I wonder what others have observed in this regard.
4 hours ago