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Phil Harrison talks about his new MS studio - Lift Studio, making 'cloud games'

There are tricks used to hide lag, and streaming game content via the "cloud" doesn't always mean just video. Consoles and other hardware can front-load the GUI, constant assets, etc. and simply use server-streamed data to load more of the level, special animations, approximate complex math (for any physics heavy stuff) and so on.
 
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