They update as they go along. For example, in Star Citizen, they made the player character models years ago. They’ll keep using them for now, and the character artists can move on to other things. Later, they’ll decide to update the character models (presumably), and it would hopefully be easier than starting from scratch.
Part of it will depend on the game engine you’re using. Some engines will be easier to update than others.
Professional dev here.
Generally, visual targets are planned early in development because changing that mid-cycle is very expensive (high quality art is very labor intensive). So basically, if you are planning on releasing a game in 5 years, you try to hit the visual quality you think will be the norm (or cutting edge) 5 years from now.
So really, it’s educated and experienced people just guessing for the most part. And sometimes they get it wrong.
There are some things that can help, though. Graphical features are not as labor intensive to implement as it is to redo the art at a higher quality, so later on in development, studios may implement things like better lighting, reflections, foliage shaders, stuff like that. But for the most part, a lot of it is planned years in advance.
As for Star Citizen, they’ve probably been improving things as they go (probably one of the reasons that project’s dev cycle has run for so long). But they also had the benefit of being a game that was trying to push the limit of what was possible on PC all those years ago. If they were targeting base PS4 or something at the start, it likely wouldn’t look as good as it does now.
Depends on the tech. Typically they run using an engine and that engine is updated independently over time. Sometimes certain tech like DLSS can be added to the finished product without having to overhaul the entire rest of the program. But a lot of the time they just don’t or don’t really need to.
If you design you game under heavy constraints about hardware specs, then as technology evolves you don’t still loose the benefits of having the game designed to run on lower specs.
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