After years of anticipation, the Xbox One and Sony PlayStation 4 both go on sale this month, marking the arrival of a new generation of consoles vying for your attention in the Christmas rush.

Both machines are powerful platforms with redesigned hardware capable of pushing out HD graphics with ease, and with them game developers will be able to create bigger, more ambitious and beautiful environments for you to play in. After all, their hands are no longer tied by 2005 tech - ancient in computing terms.

What you may not realise though is that faster graphics cards and processors aren’t the PS4 and Xbox One’s greatest weapons. They alone won’t help usher in a new era in the console wars. Not if Japanese gaming giant Square Enix has any say, anyway. Instead, it’ll be the broadband connection on the back of both that takes gaming to the next level. Here’s why.

Enter Project Flare

With just days to go before the Xbox One and PS4 hit store shelves around the world, Square Enix, the publisher behind hits like Final Fantasy and Tomb Raider this week revealed its vision for the future of a gaming.

It’s called Project Flare, but it’s not just some new engine that does slightly better lighting, or lets you shoot holes in the floor of a level as well as the walls. Instead, it’s a radical rethink of how games are played.

Instead of simply relying on the lone processor inside your console to compute all the movements and graphics, and align all the pixels perfectly scores of times a second, Project Flare hooks up to Square’s farms of powerful servers over the web and uses them to outsource the work to.

The result? More calculations than one PS4 or Xbox One could manage on their own. Here’s a low-key example of what’s possible to start with - a reimagined section of Deus Ex: Human Revolution.

What’s special about this? When your character Adam shoots down all the hundreds of boxes, Project Flare kicks in and calculates all the physics of the interactions between them as they cascade down, something that would cause even a next-gen console to grind to a few frames per second.

Of course, nobody wants more boxes in their games - but replace all those tumbling containers with laser beams and star ships and suddenly you’ve got our interest, and that’s exactly what Square Enix is planning.

“You can imagine what we could do if these weren't just boxes but people or NPCs or enemy characters or lots and lots of robots flying,” Square Enix's director of business development Jacob Navok told Polygon.

“We could possibly achieve real-time battles that look like battles in the Lord of the Rings movies."

That’s a pretty exciting prospect even if you’re not a Tolkien fan, and Square Enix have already whipped something up resembling it. Another Project Flare tech demo shows what’s possible in a massively multiplayer online (MMO) game like Final Fantasy XI.

Suddenly, with picture in picture displays you’re able to see where all your other party members are at all times - and that’s just the start. The final demo Square Enix showed the press gives you some idea of just how powerful this technology is: here’s how many instances of a game it could potentially handle, all side by side on one screen.

The video doesn’t have a narrator, but if it did, he or she would be pointing out just much scope this has to change multiplayer games. Imagine a League of Legends-style MOBA game with even more players and bigger maps, or a shooter with thousands of people in the same map - suddenly paying for that Xbox Live subscription becomes a lot more appealing.

To boldly go where OnLive has gone before If you’re a seasoned gamer, some of this might sound a bit familiar. After all, the concept of using remote computing to play games isn’t new in itself. You could stream some early PS3 games right to your PSP handheld over a Wi-Fi connection, for instance.

Then there was OnLive. The cloud gaming service turned heads in the late 2000s with its bold promise to let you stream entire games over a broadband connection, just like Netflix. All you needed was one of its cheap micro consoles, a low power PC or even a smartphone and you could play Batman: Arkham City on the go over the web.

OnLive works as promised, but it’s fallen on rocky times since, including major layoffs in 2012, so it doesn’t exactly bode well for Project Flare on paper. Here’s the difference though: OnLive only removed your console from the equation. It still plays the same PC games powered by one Intel processor.

What it doesn’t do is let you play games that use more than one Xbox or PlayStation worth of power - at least not yet. Project Flare does.

“OnLive and the other companies were just putting a console in the data centre,” Novak says. “They weren't actually changing anything about it. There was a shift in the distribution model, there was a shift in the business, but there wasn't a shift in the game design."

In other words, Square Enix wants you to play games that are powered by banks of PlayStations slotted together and collaborating - and it’s not even asking you to try and find space for them all in your living room. Your one lone PS4 or Xbox One is just a gateway into this new type of game.

Project Flare is just the start

Square Enix says Project Flare as a commercial product is still several years away, but it already has a partner in the scheme: publishing giant Ubisoft. The team at the latter’s Quebec studio are working on ways to stream “Project Flare” games directly to players.

n the meantime, both Sony and Microsoft are using cloud computing to bolster their own next-gen gaming services. The PS4 will let you stream games over the web using technology from OnLive rival Gaikai, which it purchased last year. Xbox One exclusive Titanfall meanwhile will automatically match players for you based on location while you play, and Forza 5 will even use cloud computing to monitor the way you drive, and alter virtual drivers’ AI (artificial intelligence) accordingly.

These concepts are just scratching the surface however, Ubisoft CEO Yves Guillemot believes. “Ubisoft and Square Enix share a similar vision for how cloud gaming will drive our industry forward,” he says.

“The technical advances made by Square Enix and Ubisoft’s growing expertise in cloud computing infrastructure will eventually help us deliver gaming experiences that are more accessible and immersive than anything available today.”

Square Enix and Ubisoft are not alone however. Earlier this year, OnLive general manager Bruce Grove predicted to Red Bull UK that sometime soon, a studio could create an ambitious PC and console game that could only be possible with the cloud.

“If you can imagine that in the background we have rafts and rafts of GPUs and CPUs [graphical and central processor units, the tech that makes computers tick], as a game developer I can start to think about what can I do with all that power,” he said.

“Does this mean I can start to create applications that were never really created for the level of consoles?”