"The study of players discussed in this essay indicates that failure serves the deeper function of making players readjust their perception of a game. In effect, failure adds content by making the player see new nuances in a game."
Through his implications regarding the "sweet spot" of difficulty for game designers, I wanted to explore multiple types of failure and how they've been expressed in recent games. Let me begin by saying this post is more of an exploration of failure than a treatise. I encourage you to share your own experiences with failure and punishment. I can assure, I have hours of failing experience myself.
Just this past weekend, Scott and I were playing Resident Evil 5, fighting the final boss. Unfortunately, our ammo reserve was depleted and we were forced to rely on our knife attack. If you've played RE5, you know how absolutely absurd it is to accomplish such a feat. Naturally, the battle was taking longer than expected, and I vocalized my discontent. Scott, on the other hand, was enjoying this herculean test of skill.

For others, failure is only failure when the game over screen pops up. This is the difference between Outcome Failure and Process Failure, two types of failure easily applied to game design. Though I agree with Juul's position that players want to feel somewhat responsible for failure, differentiating between competing forms is important because it shapes how players perceive punishment. In my case, the punishment lasted far longer than it should have considering I had already internalized my failure and drawn what nuance I could from the game's mechanics.
I also think there is a small, but important difference between in-game and out-of-game punishments for failure. The RE5 knife fight is an in-game punishment because it does not necessarily allude to the player. There is no point where the game says "You Sir, on the couch, eating a hot pocket; you messed up big time." Sure, increased difficulty is punishing the player, but I can also imagine Chris and Sheva are being punished for their own incompetency. With a little imagination, I can distance myself from the failure and feel only "somewhat responsible." Why blame myself when I can blame the protagonist?
The out-of-game punishment explicitly defines failure as my own. I would consider a game over screen an example of excessive punishment in this category. A more apparent example is failure in a multiplayer game. Take Left 4 Dead as an example. Success in L4D depends on team cohesion, and there are various in-game punishments for straying too far from the flock. There is also out-of-game punishments when team members chide other players for their poor gameplay. When players rely on each other , voice chat becomes a punishment tool to reinforce good player behavior. In this case, social dynamics pressure players to improve their skills lest they become insulted.

Likewise, in-game and out-of-game punishments can be good or bad. There are plenty of unforgiving games, demanding tedious replays after every failure. Yet multiplayer punishment isn't always an improvement, especially when people insult your mother instead of give you tips on how to improve your performance. Some games are unforgiving with failure, forcing players to persist in the face of tiresome gameplay.
Perhaps it better to clarify Juul's claim by saying good failure adds content, and good failure depends on a games themes and forms of punishment. Ammunition conservation in Resident Evil 5 is just as important as its grotesque monstrosities in creating high stress situations. Likewise, group voice chat in Left 4 Dead develops team camaraderie and promulgates successful gameplay tactics. Meanwhile, games like The Path quietly dismember our notions of sucess and failure. Gamer masochism never ceases to amaze me.