A retcon (short for retroactive continuity) is, in a nutshell, a storyteller's tool that adds previously unknown material to an event in a previous story. As with any tool, the quality of the finished product depends on the user's skill and intent.
Now suppose that, months later, another writer wants to bring Doctor Doom into another story. It would strain your credulity to see him alive with no explanation. Continuity, an element of good storytelling, demands that the writer explain how Doom returned from his trip into space. The writer tells you something you didn't know at the time—"of course Doom has a jetpack built into his armor"—problem solved. With few exceptions, a writer will leave some ambiguity in these situations, precisely so that later writers can use the character again.
A retcon can also solve problems created by other writers. In a serial medium such as comic books, the creative teams change from time to time, and each team has its own conceptions of the characters. If the previous team made a change that doesn't fit in with the new team's ideas, they can explain it away. In an extreme example of such a retcon, an entire season of the television series Dallas was undone by retroactively presenting it as a bad dream of one of the characters.
On the other hand, a retcon can be a bad thing. The only rule in writing is that there are no rules, but there are guidelines.
Guideline #1: play by the rules. All fiction depends on suspension of disbelief, your willingness to accept a story on its face. It may violate the rules of our world, but you ignore the impracticality as long as the story is internally consistent. In this type of bad retcon, someone does something out of character, or something happens that directly contradicts what previous writers have accepted as true. In other words, the retcon involves something inconsistent with the accepted "laws" of that fictional world.
Guideline #2: use them sparingly. A retcon pulls you out of the story for a moment, forcing you to evaluate it in light of what you already know. If it's plausible and consistent, you'll accept it quickly and go on with the story. Further retcons keep pulling you back out of the story and ruin the experience.
Guideline #3: keep it simple. A retcon adds new material to an old story. If you have read the old story, or first read it at a later time, you will feel cheated because so much was "left out."Guideline #4: show respect. Some comic-book events have become legends. Changing them retroactively cheapens them.
For a good example of bad retcons, see the Clone Saga.
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