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@Skeeuk:
The things that are the largest in a game are textures and sound (and if you do pre-rendered videos, those as well). The rest, like lighting, filtering, AA, post processing, physics, anything that makes a game actually look good, is basically instructions aka code, which is nothing in size compared to the ones mentioned above. The real kicker against the X360 was the lack of a hard drive in every console out of the box. The hard drive allows for a lot more optimization, and since the PS3 has that, and the X360 hasn't, the PS3 has a clear advantage in this regard.. Also..

Forza 3 was made in 2 years. It might be a custom engine, but there's only so much you can do in 2 years time
Ninja Gaiden 2 had a new gameplay engine, not a new graphics engine. That's completely different...

Mass Effect 2 looks better than Mass Effect 1 because they sacrificed AA to improve the lighting, and also resolved pop-ins and other annoyers. Mass Effect 1 never got the graphical praise it deserved because of those issues.

Some PS3 exclusives might have the edge, but it's not a universal rule..

If Alan Wake was across 3 DVDs, the only thing they could've improved were the videos. Seriously, space is not a real issue here, neither for the PS3 nor the X360. For both systems, the bottlenecks are in the hardware itself, not in the amount of space. Doesn't matter if you can put higher res textures on the disk if your texture filtering sucks during gameplay.. Might as well use some lower res textures to lower resource usage.. Sure, if you want to create a huge world, space might be a problem.. But games like GTA IV, Just Cause 2, Oblivion, FarCry 2, Assassin's Creed II all still fit perfectly on a single DVD.. The only problem might be RPG games..



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