The Birds and the Bees
As many of the people who posted before me have mentioned, the main reason developers leave out sex in online narratives is to be accessible to a wider player base. Most online games get away with a T for “teen” rating because of “crude humor” and “animated violence”. Most first person shooters end up with a M for “mature” usually for “graphic language” and “graphic violence” and are unable to be purchased by anyone under 17. However, games with sex in them end up with the dreaded AO for “adult only” rating. These games are unable to be purchased by anyone under 18 and carry a sort of notoriety. Manhunt 2 for Wii received preliminary rating of AO, but the developers quickly made adjustments to bring the rating down to M. Most stores and distributors refuse to sell an AO game so the game companies profit margins would be cut significantly. This is the primary reason for leaving out sex in online narratives.
Another reason sex is omitted lies in the difficulty of implementation. Why would programmers add an extremely complex ruleset governing sex, when they are already up to their eyeballs in coding for things like fights and NPC conversations? They wouldn’t. The amount of extra resources needed to implement sex into an online narrative is far too great for far too little a reward. Once again it comes back to money. If developers had infinite resources to produce a game and the game didn’t have to make money, they might consider adding sex. However, this is never the case and sex will likely never become a part of any online narrative unless the societal views of sex change. Sex, at least in the United States, is such an “immoral” thing to do, or even talk about. As a result, it will be brushed aside as an element to be included in online narratives. -Chris

I think that rating system is powerful — very few developers are really willing to tackle the risk of a low sales volume just so they can add sex to their games.