Being able to quickly place lights and design materials for a scene with realistic ray-traced rendering gets believable results in simpler fashion than by having to painstakingly recreate all the details of natural lighting with existing conventional methods.
It requires a lot more of the end-user hardware, but overall gives the artists more room to focus on things other than making sure the lighting and reflections aren't distractingly wrong.
The promise of raytracing is that you can get great results without a lot of tricks and special casing which frees up the content creators to focus on the visuals they want to create without worrying so much about technical implementation details. That only really works if the target platform supports performant ray tracing as well as the content creation tools.
But making that look good is the question: the human eye has expectations for how the fire effect is supposed to look when reflected on the water, and if the fire is to be "believable", it needs to light up the area around it.
Its clearly a demo explicitly designed to take advantage of Raytracing (a dynamically moving source of light), which is hard to emulate with traditional effects.
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The idea is that artists can build new worlds, possibly with less effort, thanks to this technology.
We haven't even gotten to a 4k60fps standard in modern titles and raytracing content will drop people to console like frame rates.
Raytracing has always been possible. There are GPU demos of real-time raytracing back in 2010. But gamers typically care more about higher-FPS / higher-resolutions rather than more realistic shadows and reflections.
I think a "killer app" needs to be done. Ex: a game designed around raytracing: a stealth game using shadows to gain information around a corner (and worrying about the placement of your own shadow). That sort of thing...
For now, game developers have this cool visual technology, but no real way to integrate it into a gameplay mechanic that players really care about.
It's a balance though, right?
Programmable shading took off because lots of people wanted the better shading that it enabled (at the cost of lower framerates/resolution). So it seems plausible that people might again choose quality improvements through raytracing over framerates/resolution (especially as 4k 120fps becomes more achievable).
Will video gamers be willing to pay $600+ for GPUs like the 2070, 2080, or 2080 Ti, for a few improved shadows and reflections / refractions?
I think yes, but ONLY if you get a game to actually make shadows and reflections important. RTX benefits are a very subtle shift that costs a LOT of money right now.
We're talking about adding RTX features on top of existing engines for a subset of calculations (reflections and global illumination).
It would be absolutely a killer app to have a fully path-traced engine. But that's 10 years away at the minimum. A $1200 GPU can only do ~1-sample-per-pixel at video game speeds (~60fps).
The heavy denoising and post-processing means that the majority of your video game graphics will remain rasterized. "RTX" is added on top for specific surfaces (ie: reflections on the water), or specific lights. There's simply not enough GPU power to get anything more than that right now.
EDIT> No point having high-resolution if all it does is show you the puppet strings. NTSC was pretty real, back in the day.