Square Enix has shown off their next-generation game engine at a press conference held in Tokyo, where they've said their goal is to build what they call 'quality live action' graphics. The screenshots below show off what they've achieved, with Square Enix trying to get as close as absolute true fidelity thanks to DirectX 11 and their new engine, Luminous.
Square Enix displayed some of the source material pictures and side-by-side pictures with in-game shots. Luminous has allows engineers to build navigable spaces rendered in real-time, as shown in the video I have placed below. The tech is not available to studios outside of the Square Enix network, and for good reason. The Japan-based publisher wants to push this tech and scale it across small casual games right up to triple-A titles.
The screenshots do look very, very impressive. I'd like to see the engine in action, with firefights and some outdoor scenes. I do think this engine would suit close-quarter survival horror games quite well... realistic lighting (that can be shot out), destructible environments, it would make for quite the realistic looking horror game!