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What faction do you recommend starting as?
The dwarves not having Cavalry is a huge turnoff and the vampires sound very weak.
I want to play as the chaos faction, but I heard you can't capture settlements with them?
*Disclaimer* - Long post here. I've only played the Empire and a little bit of the Dwarfs. If anything below is incorrect, then please feel free to correct me or disagree with me. A lot of this is just my opinion based on what I've read and observed in game so far. Would be interested to hear other's opinions and thoughts as well. Thanks! I'm very partial to the Empire due to the fact that they are, IMO, the most balanced of the 5 factions and plus I just like the humans. Not to mention that their starting location allows for some growth and breathing room before you are forced to face down Greenskins in the south, Vampire Counts in the east, or Chaos in the north. Typically the Dwarfs and Empire are allies so they rarely are an issue but you can't neglect diplomatic relations with them for sure. That's the Empire's challenge is that they are surrounded by enemies but with careful mgmt (diplomacy and force) can avoid multi-front wars, at least until they are powerful enough to handle a two front war say between Chaos, VC, and/or Greenskins. If you are finding yourself in a 3 front war between the 3 other factions then you are definitely doing something wrong and in for a rough go of it. From a unit perspective, most of the Empire units are middle of the pack. Solid Infantry, solid missile troops, strong Heavy Cavalry, excellent artillery, and solid Magic. Still, the Empire has no flying units outside of mounts you can upgrade for your Hero's/Lords. So they are a good/strong faction to play no doubt as they have a good mix of units that offer great flexibility tactically. Their weakness to me is that they are surrounded by foes AND other factions separately have better units. For example, the Dwarfen, Greenskin and Chaos infantry is, generally, better than the Empire's. VC, Chaos, Greenskins have better Large/Monster units than the Empire though the Steam Tank is quite good for the Empire. Chaos and VC cavalry is, generally, better than the Empire's. You get the idea. They rarely have the best of anything but when all their units are working together on the battlefield, supporting each other, using the land well (Hills, forests, bodies of water, secured flanks, etc.), playing to the enemy's weaknesses, they are a formidable foe in Attack and Defense. They are the essence of balance when it comes down to it and I found them very challenging, yet enjoyable and satisfying to play.
One of this game's strengths is that each faction is so uniquely different from a play style perspective. Playing as the Empire is very different than playing as the Dwarfs. Yes, the Dwarfs have no cavalry but that is true to the lore. I mean, who's ever seen a Dwarf ride a horse? So no cavalry for them but they make up for it with superb Infantry, strong missile troops, and excellent artillery. A well put together Dwarven army is a defensive juggernaut and one hell of a tough nut to crack. They aren't meant to be fast, offensive type units and armies but they are really tough in defense and inexorable in the advance with the right unit support and use of the land (Hills, forests, bodies of water, secured flanks, etc.). I think they particularly excel in defensive Mountain battles. The last thing I want to do is go into a Dwarf's backyard and try to pick a fight. It's also true that the Dwarfs have no magic (i.e, Wizards with offensive spells) but they do have Runes that they can use to buff/debuff and augment their abilities. They are a Defensive player's dream faction to play.
I haven't played as the VC but what I know is that they don't have any missile troops or if they do, they are poor and they have the need to have Vampiric Corruption in any province they move through or control otherwise they take damage every turn. Again, this makes sense from a lore angle. Vamps can't just saunter around in the daylight unmolested for obvious reasons. They need the darkness and corruption before they can openly show themselves. Plus side of Vampiric Corruption is that it hurts your enemies. Their armies are very intriguing to me. No/poor missile troops but they have awesome Monster/Flying units. (Varghulf, Terrorgheists, Crypt ghouls). They have mostly weak infantry(zombies,skeletons, etc.) but their elite infantry they do have is excellent (Grave Guards). They have superb Heavy cavalry in their Hexwraiths. They also have Magic and their necromantic abilities look to be quite useful. They can raise the dead. That's pretty cool and useful on the battlefield. I would say they are different take on a balanced faction. Similar to the Empire but with different pros/cons.
I haven't played them but the Greenskins are almost an exact opposite of the Dwarves IMO. They are an Offensive Player's dream. They are aggressive and meant to Attack, Attack, Attack!! Their Infantry is excellent (arguably best in the game outside of Chaos), solid missile troops, solid Heavy Cavalry, excellent Large/Monster units (Giants, Trolls, Spiders, etc.) and they have pretty solid Magic to my knowledge as well. Their weaknesses are artillery (compared to the Dwarfs and Empire) and they suffer in the Leadership category. Their units are far more prone to rout than other Faction's units when they face a formidable foe. Also, since they are all about the Offensive and Attacking, they have a Fightiness meter that if it drops too low by not fighting their enemies (everyone that's not a Greenskin), they will start fighting amongst themselves and their units will disband/rebel. It can be a weakness but also a strength as if your Fightiness meter is high(i.e, you've won lots of battles recently), you have a chance to obtain a "WAAAGH!!", which is essentially a whole other 20 stack army that shows up to fight with you. It's very lore accurate and a cool feature for them. Their other weakness is economically they struggle to develop their provinces so troop replenishment can be a concern. Most people would say they are the hardest faction to play from a Campaign perspective but in battle they are right up there with Chaos as tough foes.
Lastly, there's Chaos. These guys have probably the best Heavy Infantry in the game. They have well armed and armoured Infantry and Heavy Cavalry, excellent Large/Monster units, and solid Artillery. Their weaknesses are that they have poor missile units, they can't trade with other factions, and they are poor at diplomacy. Still, they are some tough SOBs to go up against in battle. They are similar to the Greenskins in that they are very much an Offensive styled faction. To my knowledge, you can capture settlements with them (I will stand corrected if someone else knows this) but they favor more raiding and razing tactics for funds not to mention they really rely on the spread of Chaos corruption to lower public order and spread rebellion in enemy provinces to weaken them before they attack. They definitely favor someone who likes an aggressive style of play but that's not as hard as the Greenskins from what I can tell and from what I've read.
For the TLDR crowd, take a look at this article on the 5 different factions.
http://www.gamerevolution.com/features/a-guide-to-choosing-which-faction-to-play-in-total-war-warhammer