I made a new friend at my job, and he's also a gamer. Yesterday we were enjoying some free time, talking about our gaming life. We ended up talking about how graphics evolved since the early video game days.

Then, at some point, he said: "Bro, I think Unreal Engine 5 is probably the peak for graphics. I mean, it can't get much better than that. Gaming will probably evole on gameplay and more realistic mechanics, but I think the visuals are very close to the limit"

I told him that at PS3/360 days we had the same feeling. He agreed, but also stated that the graphics at PS5/XSX are realistic enough so it doesn't actually need to evolve more than that.

Do you agree with him?

Electronic circuits can no longer get so much faster than they are now, but the shift from raster to neural rendering should boost graphic capabilities to some unknown extent. Even now we're halfway there already with frame generation and deep learning upscaling.

But I think it's more a question of 'how long it takes to develop' rather than 'how good games can look' right now, to be honest. I'm sure if you could spend ten years polishing a PS5 game it would look like a PS6 title already, but that's not viable.

Of course graphics can get better. But to my eyes, they just became good enough since the PS3 days. I don't care too much about a little more bling-bling or something. Which is why I stopped caring about graphics.

I remember folks back in the 6th gen saying that original Xbox/Gamecube graphics were "approaching photorealism" and that games couldn't look much better than Resident Evil 4, Doom 3, Halo 2, Chronicles of Riddick, etc.

Now compare those games to something like Hellblade 2, Alan Wake 2, Avatar Frontiers of Pandora, etc.

While the rate of advance does seem to be slowing down these days, I'm wary of ever declaring that games can't look much better, simply cos I have seen this claim made in every generation for the last 25 years, and so far its always been wrong.

There's still improvement to be had since even the best looking games of today don't hold a candle to high quality CGI seen in things like high budget films. That gap is a lot smaller than it used to be though and I expect that sometime within the next 15 years or so that true photorealism or close to that will be doable in real time graphics and eventually some time after that visuals on that level will become cheap and easy enough to produce for even small indie teams to have in their games. It's gonna be really exciting when that happens.

At a certain point, making graphics look as good as the hardware allows is going to end up causing diminishing returns. Too expensive and time consuming for something not that many would care about. The best thing to do with the current hardware power is to improve the games' AI, have as many bots as smart as possible.

"Electronic circuits" still have significant room to exponentially grow and become more complex... And thus will enable new rendering paradigms.
TSMC 3nm is not really using 3nm sized transistors, it's an advertising term to make themselves look cool and isn't representational of any geometric feature sized of the chips themselves.
In-fact the transistors are actually much much much much larger, so we are a long way from reaching peak-silicon when Quantum Tunneling becomes a physical limitation.

And once we are unable to go smaller, we will start to go higher.
NAND started to do this as the smaller you make NAND cells, the more unreliable they become, so manufacturers started stacking instead.

At the moment we are still taking a "hacked" approach to rendering by using Rasterization and -sprinkling- a tiny tiny tiny amount of Ray Tracing on top.
We are far removed from a full rendered Ray Traced rendered game world that represents photo-realism in the truest sense.

And that is still years away.

They can get better but it's a battle if you want a high enough frame rate and resolution.
I used to think 360 and PS3 graphics were mind-blowing (I grew up with a GameCube and Wii mostly) but a lot of them look like garbage compared to Series X, PS5, and Gaming PCs.
To my eyes, Xbox One and PS4 are clear improvements over their predecessors. Series X (don't have one, but I know it looks similar to PS5 in performance) and PS5? It's mainly load speeds and more 60 FPS and dynamic resolution support. I don't think I've even seen one PS5 game that looks that much better than the best-looking PS4 games running on a PS4 Pro.

I think graphics can eventually surpass real life. You might think how is that possible?

Well it is very simple, in a game you can choose what to show people. A person can only see a few miles, but in a game you might be able to understand multiple miles. A person can only see stuff that is small enough but a game can show you even smaller things. A person can only comprehend so many details around them, but a game can force you to comprehend many multiple more things. A real life city might only have 1000s of objects, but a game can shove 10000s of objects in it. etc. etc.

Still tons of room for growth, especially with performance.

120 fps, or more, is the future.