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Difficulty balancing

So I’m sitting pondering over a multiplayer coop gamedesign.
Let’s say it starts out with 10 players.
They have to pass three rooms to complete the game.

Ways to balance this.

I balance each room so that with skill all 10 players get through the rooms, with a slight increase in difficulty, as the game progresses.

I count on players not surviving, and thus decreasing the difficulty as the game progresses after the projected amounts of casualties. (Example room 1 usually kills 2 players, then room 2 should be at a difficulty for 8 players. Room 2 usually kills 2 players as well, then room 3 has to be at a difficulty level appropiate for 6 players.)

I’m leaning towards the second, actually making a game hard enough that some players wont make it.

Thoughts?