Just when you thought PC games had already reached unprecedented new heights in graphics technology, it seems that the bar has been raised even higher. Epic Games showed off the upcoming third generation of its Unreal engine technology at the Game Developers Conference 2004. Unfortunately, Epic wouldn't allow cameras anywhere near the presentation, but we can still say that the developer's new technology looks extremely impressive.

As a technical demonstration, Unreal Engine 3.0's graphics are amazing. The first thing we were shown was a gothic cathedral at night. Ornate gargoyles decorated the walls of the cathedral. The engine uses per-pixel lighting to create almost lifelike shadowing effects, even with only a few light sources. The engine will also use a technique called HDR lighting, which allows for certain light sources to glow intensely bright, thus creating even crisper and cleaner shadows.

We were then taken inside the cathedral to see some of the advanced physics and lighting effects at work. A floating lantern, tethered by a chain, slowly traveled through the corridor, then bumped against the wall, causing it to sway crazily. The light from the lantern swung around due to each collision, and the shadows from the various objects in the room reacted realistically to the lamp's movements. As we saw, the engine's shadows also blur the farther they are from the light source.

The interior of the cathedral was stunning, since its brick walls looked as though each brick had been individually modeled. Up close, not only did the wall look like it had a protruding, textured surface covered with blemishes and scratches, but each brick looked like it cast its own shadow. However, this was just a technical illusion, because the engine uses an advanced form of bump-mapping called "virtual displacement mapping" to make the bricks look three-dimensional. When the texture was removed, it turned out that the wall was almost a completely flat surface.

In fact, the engine does a lot of amazing work with textures. We saw an incredible dragonlike creature, built out of millions of polygons. But even more impressive, you could see the veins and the cracks in its skin to an incredible degree. The textures are so good that it allows Epic to scale down the number of polygons in each creature to create a normal-mapped model with a much more reasonable number of polygons but losing virtually none of the overall graphical effect. We saw goblinlike creatures rendered in amazing detail, one of which was a gigantic, heavyset humanoid creature with long teeth that was composed of some 6 million polygons, then reduced to a version consisting of a comparatively meager 6,500 polygons that looked almost as good, thanks to the normal-mapped textures.

Epic also knows that it's important to keep such powerful technology developer-friendly, so the next generation of the Unreal toolset will remain easy to use. The editor will allow you to easily edit physics in the game by determining an object's weight and the extent to which it's attached to other objects in the environment, such as a pile of unconnected blocks or a door on a loose hinge. The editor also allows for textures to be manipulated to a considerable degree using a relatively simple drag-and-drop interface.

Epic ran the demonstration on a system with a 2GHz CPU from AMD using next-generation hardware from Nvidia (a system in another room ran the demonstration using next-generation ATI hardware). Even with that powerful silicon, the demonstration struggled at times. However, it's clear that this technology will be used to power the next generation of PC games, as well as games for the upcoming generation of video game consoles. And if these games can look anywhere near as good as what we saw in today's demonstration, the future could look stunning, indeed.