There are two types of cutscenes. Pre-rendered cutscenes and real time cutscenes. Real time cutscenes are performed real time using the game’s engine. Control is removed from the player and the camera moves to predetermined positions while the characters perform predetermined animations, however it’s being recreated in real time, using the game’s engine to run a “script” essentially. The benefit of this is that it allows for seamless transition to custcenes from gameplay, it allows things like a character’s clothes or gear to reflect those that the player is using (you might have noticed in some games how the character in cutscenes is dressed with their default clothing rather the one you’re using) but the drawbacks of realtime cutscenes are that they’re limited by the game’s engine and they may also be susceptible to bugs. Another benefit is that they are able to be modified in case there are player actions or choices affect how the story unfolds. They’re versatile.
Pre-rendered cutscenes are just video files that the game plays for you. They’ve been created beforehand and stored in the game’s files as videos. The benefits of pre rendered cutscenes are that they’re not limited by the game’s engine so they can show whatever they want, so for example they can show a massive battle unfolding that would not be possible with a realtime cutscene because the game’s engine can’t actually support hundreds of characters on screen, or even if the engine can, most people’s PCs can’t. They were especially common in previous years when game graphics were not as good so that they could make the story presentation more cinematic and the visuals more appealing. It’s the case of such cutscenes where games can suddenly look a lot better, since they’re not being produced in real time.
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