The clip came from a "small gaming conference" in Prague, where they were discussing game design. The footage is of a "200x200 metre area" from the "story's several square kilometre setting".
It was an example of what the game environment was going to look like and didn't have any of the bells and whistles you'd normally expect, like proper lighting or effects.
"The video clip, which you can find on the internet and which, to our great (and pleasant) surprise, has attracted an unexpected amount of attention worldwide, is not in reality a demonstration of next gen graphics so much as a typical workup of the model in a quality sufficient for our game," blogged Warhorse Studios.
They did add it "is supposed to run on next gen consoles as well".
"This is more or less what a 200x200 metre area of the story’s several square kilometre setting might look like," continued the studio's explanation. "It’s in no way all we’ve got, it doesn’t have the final lighting and there are no effects in it. It’s simply an example of the environment. All of this was said in the presentation."
Slapping 'next-gen' on the footage isn't appropriate, they add: "To call it ‘next gen’ is also somewhat misleading, considering that we showed it on a two-year-old laptop with a mobile GeForce 555M, which is not exactly state-of-the-art PC or next gen Xbox. Obviously, the machine wouldn’t have fared so well with the whole several square kilometre terrain we have, especially if it had to run the game itself, AI and the full world simulation and not just a preview in the editor. However, the game runs fairly OK on present day average PCs, and we haven’t yet even started seriously optimizing."
They go into some detail about how Warhorse started back in August of 2011 with just nine people, and has now grown to twenty-four with additional manpower from external contractors. "For the first few months we were dealing with technology. We evaluated practically all the engines available at the moment, as well as a whole series of middleware technologies, and in the end we selected CryEngine 3 as the best candidate," said creative director, Dan Vavra.
"At the outset we were a bit crestfallen at how slowly the graphics were progressing, but now it’s turned around and we have a whole city and a huge chunk of landscape done, more than I had anticipated right at the beginning, and I must say it looks pretty good. Obviously, not everything is yet optimized and there’s a whole bunch of interiors still wanting. Nevertheless, in comparison with the “average RPG”, on which dozens of graphic artists work, it’s a worthy feat."
He continued: "We developed a number of the complicated game systems needed for creating an RPG. Our combat, dialog and dressing systems are truly unique and I’m duly proud of them. Lots of other, smaller systems are slowly starting to function, too (I have to admit I’m clueless about the purpose of some of them)."
"All of it for the time being is still in a more-or-less sketchy state and we’re putting together at this point the first sample quest script, which is proving a relatively complicated birth." In October the studio started mo-capping some experienced fencers who have "a few Hollywood movies under their belts". This was for NPC combat on the first quest. Right now they only have a "rough outline" for the RPG's story.
Check out the full blog write-up over at Warhorse for more.