SquareEnix started this engine about 4 years ago to take full advantage of the hardware graphics abilities of the Playstation3 console. This engine is so powerful that many players can not actually tell what the difference is between pre-rendered and real-time graphics. Some fans are even arguing (incorrectly) that this project doesn't even use pre-rendered videos.
Mis-informed fandom aside, this is just another point to my argument that hardware rendering has reached a point where the common audience member can't tell the difference. There is a difference still, but to really see it you need to give what you're looking at a close inspection:
Pre-rendered image, capture courtesy of the Eurogamer Website:
Real-time image, capture courtesy of the Eurogamer Website:
Notice the difference in the appearance of hair's smoothness and transparency, and the nicer anti-aliasing of the latter image. Also notice the more varied lighting and softer shadows. They are noticeable here on still images, but when you watch the project's 2009 trailer, can you spot the places where they switch between software and hardware? It happens at least 4 times in the first minute alone.
The above images come from an article on Eurogamer that mostly compares graphical differences between the Xbox and Playstation versions of the same project. You can read through this article if you like, but the differences between various types of hardware is beyond the scope of my thesis. I am focusing on PC-based hardware rendering, because I want to expose the necessary tools to do so and enable other animators to make use of them. Console environments such as the PS3 or Xbox are too restrictive to allow fo the custom animations and assets that most animation projects would be looking for.
Here is also another article that discusses the game, and towards the end mentions which software tools they opted to use for this project.