Tim Sweeney says photorealism may be achieved at 40 teraflops

That's cheating :p
Not really. It's just using a very advanced form of streamed, motion captured, data with prebaked lighting, models, texturing and animation. By restricting to an 'on rails' QTE interface, more can be dedicated to what's visible. And using a remote processing solution to prebuild the data, they can dedicate a whole lot more to the quality.

Or rather, it does pose an 'ethical' question as to what's cheating in computer graphics. Are photo textures cheating? Baked lighting? Motion capture? I guess as long as the video is drawn on a quad, it's still CG!
 
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