CGI actually stands for computer Generated Image. But in this context they are using it to describe prerendered video, which means it uses almost none of the hardware to display.
Everytime you see something using the "in game" engine it's running real time off the hardware and right now hardware can't support real time what CGI looks like. It's getting closer though. Some In game cutscenes are hard to distinguish between CGI but it's close.
Very interesting! So do developers know how much they can eek out of the PS3 yet i.e. exactly how close we can get to CGI? I remeber God of War cutscenes on PS2 looked amazing. Can games run a CGI video at all?
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