Difficulty

Diablo III will have three difficulty levels, just like Diablo 1 and Diablo 2 did. They'll even still be called Normal, Nightmare and Hell.

Official Comments

Jay Wilson talked about his desire to ramp up the difficulty and complexity later in the game in a December 2008 interview with 1up.com.[1]

"The combat model doesn't have a lot of depth in the previous games. It was very much a "one-skill spam" kind of game, which I think works great for the Normal [difficulty] playthrough. I think most of the audience is just fine with that, and through most of the Normal difficulty, it's going to be like that. But as you go into Nightmare and Hell difficulties, I think that the more serious player will appreciate a game that's a little deeper on the combat-mechanic side."

Later, in an official interview, Kevin Martens discussed a possible fourth difficulty level called "Inferno."[2]

"Ultimately, it’s going to take the game's harder difficulty modes -- Hell and Inferno -- to challenge the limits of the best Diablo III players."

Difficulty Levels

There are going to be three difficulty levels in Diablo 3, most likely called "normal," "nightmare," and "hell" as has become standard in the Diablo series. How much more difficult and what sort of variety the higher difficulty levels will add remains to be determined. Jay Wilson addressed this issue in a November 2009 interview. [3]

What are the differences in the difficulty levels in Diablo III other than just monsters doing more damage? ie: What reason will people have to play through these modes after having already beaten the main story of the game on an easier difficulty setting?

Jay Wilson: We haven't really gotten into the difficulty settings a lot; we're still just working on the core content for the game at this point. The primary reason as to why a player would want to progress through the game, through the several difficulties, would be for more of a challenge.

There will be also better item customization, for example a Level 100 character in a higher difficulty would see and wear items that a Level 30 character would not have a chance at seeing in the lower difficulty. Said items will also look and feel completely different whereas in Diablo II a lot of times you just had a remodel of the same old items with different names.

Difficulty Scaling in Multiplayer

How will the game's difficulty increase with more players in the game? The team has said that it will increase considerably, to the point that playing solo in a group game will be a very bad idea. But what mechanism will create this? More monster hit points? More monster damage? Improved AI?

That's not been revealed, but @Diablo did confirm, in November 2010, that difficulty was probably going to be based on the number of players in the game, not their Clvl. [4]

Difficulty currently increases based on number of players, not their levels. --Diablo

Level of Difficulty

How hard they will be remains to be seen, and hasn't been much discussed by the D3 team. It's likely they haven't planned it out in that much detail; difficulty balancing is usually one of the later details to finalize, since it requires almost everything to be finished in the game and then extensive play testing.

We do know that many of the basic game changes in D3 have large effects on the difficulty of the game. There will not be many potions, life leech will be quite rare (or non-existant), and most healing will come from health globes. On the other hand, monsters won't be full of immunities and blessed with cheesy one-hit kills. The D3 team has discussed this issue several times, and always pointed out that the abundant potions and life leech made D2 characters essentially immortal. Death came only from cheesy super damaging kills, most of which were bugs, and that's no way to balance a game.

In D3 they want a much steadier progression of difficulty, so that monsters can be challenging, without being buggy insta-death dealers. The D3 Team has also talked about the difficulty ramping up smoothly. They want normal to be fairly easy, so new players can have success and find their way into the game. The D3 Team doesn't want D3 to be a total cakewalk, since that gets boring too, but they're not looking to turn normal into a tooth and nail struggle to survive. Nightmare and Hell? Perhaps.

BlizzCon Demo Difficulty

Players who have tested out the game at demos in 2008, 2009, and 2010, have given varying reports of the difficulty. It's hard to judge across the board, since a lot of the people playing are not experienced with the Diablo games, and are struggling with the controls, don't know how to use skills, are playing a new class for the first time, or are just rushing around madly during their short demo play time, rather than clearing out levels systematically.

More experienced players have found the game pretty easy, especially when playing solo. The multiplayer is a lot more challenging, but much of that comes from people going their own way in large games where the monsters are scaled up in difficulty, or from being partied with noobs who don't know what they're doing.

Also note that the demos are modified from the normal game. The characters are turned up a bit to make them stronger (so noobs won't die repeatedly and get frustrated), and the drop rate for items is increased, so players find more fun loot.

The D3 Team has acknowledged that the early stages of Diablo III will be fairly simple, but they claim that the difficulty will ramp up over time and become quite challenging on Nightmare and Hell, especially in multiplayer games.