2 new video's showing the server side rendering in action and giving some specifics about the lag:
http://www.techcrunch.com/2009/06/16/videos-otoy-in-action-you-have-to-see-this/
The first video shows a guy playing Left 4 Dead and Crysis on his HD TV, hooked up to his laptop, which is connected to the OTOY server through broadband access. He can switch instantly between both games while playing, very impressive. According to the TechCrunch article, EA is partnering with OTOY.
The second video shows GTA4 being played in a web browser while running in the cloud. According to the tester, there is some lag, but it's very playable. Personally, I think GTA4 is not the best game to show off server side rendering because it runs on a terribly unoptimized, buggy and laggy engine. There's no way you can tell if the lag is due to the crappy engine or to the connection. Unfortunately, there's no info about the geographical distance between the player and the cloud. What it does show is that a GTA game with LightStage quality characters and environments could definitely be possible and playable when rendered in the cloud. In fact, I asked Jules this very question yesterday and he confirmed to me that it was indeed possible.
update: Many people cannot believe how OTOY can render so many instances per single GPU. I checked my notes and as Jules explained it to me, he can run 10 instances of a high-end game (like Crysis) and up to 100 instances of a low-end game per GPU. The GPU has a lot of "idle" and unused resources in between the rendering of frames for the same instance. OTOY efficiently uses this idle time to render extra instances. The games shown in the videos (Crysis, Left 4 Dead, GTA IV) are of course traditionally rendered. When using voxel ray tracing, OTOY scales even better.
OTOY can switch between rasterizing and voxel raycasting, because it uses a point cloud as input. Depending on the complexity, one is faster than the other. The scorpion demo for example (the Bug Snuff movie), was first rendered as voxels, but rasterizing it was faster. The Ruby demo from last year was completely raytraced (the voxel rendering is not limited to raycasting, but uses shadow rays and reflection rays as well, so it could be considered as true raytracing).
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