Nov. 22 will mark an early Thanksgiving with the Microsoft launch of Xbox 360, the first of the next-generation of videogame consoles.

In order to get a better understanding of how game developers are approaching next-gen game development, I spoke with many industry professionals ranging from my colleagues at Blue Fang Games to developers of the software we use to make games. What is clear from these discussions is that the game industry is excited by a future with almost no limits on our imagination.

For both game developers and gamers, next week marks a milestone: the first next-gen videogame console launch. On Nov. 22, Microsoft will release the Xbox 360 system along with 18 games. The console will be available in North America initially and then made available to the rest of the world within two weeks. Meanwhile, Sony’s PlayStation 3 (PS3) and Nintendo’s Revolution are expected early next year.

While the hardware and software manufacturers have years of hard work ahead of them, gamers are looking forward to some of the most realistic game graphics ever seen. Early looks at these next-gen game titles have shown images on par with some of the latest Hollywood vfx blockbusters. In fact, game engines have gotten so good, that many games display cinematics machinima style, via the game engine itself.

Sony’s PlayStation 3 (left) and Revolution by Nintendo are expected to hit the shelves next year.

Kelly Scott, lead animator at Blue Fang Games, says, “With the graphical advances being made these days, I really can’t see the need for pre-rendered cinematics. For some titles they will remain as non-vital icing on the cake, but the whole trend of the gaming world these days is toward the immersive experience and having a distinct graphical difference interferes with that immersive illusion. If you want to be wowed by an impressive visual experience, go watch Final Fantasy: Advent Children, but you’re going for a whole different experience than a game that draws you in as part of the action. I think the gaming audience understands this and games that have a solid artistic game environment are never criticized for using it for their cut scenes.”

Shawn Robertson, lead artist at Irrational Games, adds, “With the next-generation of consoles coming out, sometimes it’s hard to tell what is in-game, and what is pre-rendered. With game engines getting more and more powerful, in-game assets are reaching the same level of detail that pre-rendered assets have. Because of this, I think we’ll see less pre-rendered cinematics being used. That being said, the pre-rendered cinematics that we will be seeing will be more over the top, showcasing things that may be too complicated to render in a game engine.”

Michel Kripalani, games industry manager for Autodesk (developer of 3ds Max), concurs that the role of pre-rendered cinematics will diminish: “The Xbox 360 and PS3 are fast enough to display great looking cut-scenes. The cost of generating anything pre-rendered will be difficult to justify. We will still see outstanding, pre-rendered movies that will look gorgeous, but they will be few and far between. They will likely be relegated to game trailers and introductory sequences.”

Alex Chouls, technical art director at Blue Fang Games, counters that pre-rendered cinematics have less dependencies on an evolving code base and can be more easily outsourced. “Obviously in-engine cinematics will continue to grow, especially as games become more sophisticated narratively, but for many games pre-rendered will still be the more practical solution.”

One thing seems certain; the rising costs of game development will force change on the industry. How much that change has a direct impact on cinematics is still uncertain. As with most art forms, tools are an important part of the equation. The tools artists use to create cinematics and game animation will continue to play a pivotal role in both actual production and production budgeting. Recently, there have been some amazing advances in software and also some surprising consolidation amongst 3D software developers.