Ubisoft's Jacquier, the executive director of production services at Ubisoft Montreal, believes that next-gen consoles' strong feature will not be graphics, instead AI will be the real battleground for engineers, mentions that publishers are longing for better AI with small amount of memory and computation time. Jacquier said,

AI has always been the real battleground. The challenge is that, if you see an AI coming, you've failed. And that's a problem we have to overcome as we create the impression of flawless, seamless worlds.

Next-gen consoles have always been hyped and marketed based on their graphical prowess, the Nintendo Wii broke that trend and Jacquier believes that next-gen consoles will follow in the Wii's footsteps. He lated added,

In general the industry expects that graphics will not be a strong feature any more… Obviously, graphics are better for marketing purposes because you can show things. AI you can't show. Our challenge with the PlayStation 3 and Xbox [360] is that we're extremely limited in what we can do. It's a challenge for the engineers to provide nice graphics and nice AI and nice sound with a very small amount of memory and computation time. We think that the next generation of consoles won't have these limits any more. Games might have more realistic graphics and more on-screen, but what's the value of making something more realistic and better animated if you have poor AI?

Ubisoft will be investing $200,000 a year for the next five years with the aim of developing "other ways of thinking" about game production.

via gameindustry.biz