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disolitude said:

I think its up to developers to implement this so it works best for multiplayer, single player and doesn't impact the experience too much.

Lets use Forza single player as an example.

Race starts and the normal car AI is present. After 1 lap of collecting your driving patters, this data is sent to the cloud where microsoft calculates new AI enhancements that are applied to the existing AI and sends instructions back to your Xbox One. The game is running 1080p@60 on your console with no hiccups since these calculation isn't happening on your console. If internet isn't there, this doesn't happen and game still runs 1080p@60...

BTW...why is everyone so fascinated with this "internet goes down" idea? Like christ, my internet goes down once a month for a few minutes tops... Will my whole life be ruined if all of sudden internet isn't able to enhance the game experience for a minute or two?

Forza is a great example because it already shifts the graphics when you are runnin with 1 car at screen and 16 cars at screens... so I will try to show what will happen.

You are running Forza 5 with AI into the Cloud... the game uses a LOD model for car with high quality... then your internet get slow or down for few seconds (it is fast... that happened everyday... you have instabilities in internet connections and you are disconnected from the Live for few seconds... I play a lot MP and sometimes you are disconected and needs to start again... happened all the time)... so the games stop the Cloud AI and start the local one but before you are using all the resources for graphics (that a example) and now you need to use 5% of them to backup the Cloud stuffs in local... so the game shift the LOD model of the car for another with low quality to the game sustaind the 60fps.

That shift will give you a weird experience when happened but it's fime if this auto shift didn't show any slowdown or lag.