Yes they should. Running an fmv is the perfect place to hide loading times. Sure switching to an upgraded look for fmv is slightly immersion breaking, having to wait for the next section, or next piece of in game cinematic to load is worse.
I like watching proper cinematics. They can give a glimpse of what games could look like next gen. Since disk space is limited, more care is put into making those pre-rendered cinematics. In game cinematics are often too long winded. Plus the artists are free to do anything they want not restricted by rendering budgets. Trying to get in game cinematics to run within budget is a pure waste of time imo.
Movies have been doing blue/green screen from the beginning. Games have inserted real life fmv into game graphics, why not insert your actual character(s) into the pre-rendered backgrounds. Best of both worlds. In the end it's a non interactive cinematic. Who cares if it's rendered live. Instead show off the best the game engine can look, rendered at 8k with everything on max. Not hindered by object limits, memory, cpu or disk access.
However games are already very big and 1080p video takes up a fair chunk of data. Publishers are allergic to using a second disk, hosting even larger files, or paying royalties for good video codecs. Seems we're stuck with a lot of mediocre in game cinematics instead of fewer really memorable sequences that actually feel rewarding to watch after an intense boss battle. Oh well, press x again to skip.
The last game I actually rewatched certain cinematics was Ni No Kuni, the hand drawn animated sequences were awesome. Press x again to repeat should have been an option there.
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