San Francisco (CA) – At Microsoft’s GDC keynote, Epic technical director and CEO Tim Sweeney showed off the updated Unreal Engine 3 in a graphics buzzword-filled presentation.  The new engine will power the upcoming Gears of War 2 and promises great things like hundreds of bad guys on the screen, dynamic shadows and better character lighting.

GDC 2008 H.264 Video of the updated Unreal 3 engine

In our video you can also see more realistic water rendering as characters shoot and jump into puddles and pools.  Tim got the crowd laughing when started shooting a huge cube of meat to demonstrate the new elastic and viscous object properties.