MS are planning on introducing a new, hybrid cloud gaming system with the X1.
"Part of the server setup will be used to compute scenes in games. Booty explains that Microsoft is targeting areas that aren't sensitive to latency, a common complaint around cloud-powered games. "There are some things in a video game world, though, that don't necessarily need to be updated every frame or don't change that much in reaction to what's going on."
Part of the cloud processing could be focused on elements such as lighting in games. Booty describes a forest scene where light shines through trees, or a battlefield with fog. Both elements don't need to be updated in real time and can be processed in the background, while the controller remains responsive to the action parts of the game. "Those are perfect candidates for the console to offload that to the cloud—the cloud can do the heavy lifting, because you’ve got the ability to throw multiple devices at the problem in the cloud.""
This is how MS are planning to use Azure, their cloud system, to make the X1 'more powerful' than it actually is.
Their plan is to have some in-game processing done on servers, so that complex and processor intensive effects/details, that would normally slow a game down to a crawl, can be used without any drops in framerate.
It's interesting stuff, and I wonder how many launch games are planning on implementing it.
I've got a feeling that this could be a key feature in some of the new wave of persistent world MMOs that appear to be on the horizon.
It's theoretically possible that Sony could use Gaikai to do something similar on PS4, maybe this is the future of gaming across the board, with less need to pack expensive, high end components into new consoles in order to get high end visuals.