At GDC this morning, Epic Games founder Tim Sweeney gave a talk that essentially had one main point: As realtime, photorealistic graphics rise in importance, Unreal Engine will be at the forefront of that movement.

He listed off the VR and AR pioneers -- from Oculus to Microsoft with its Hololens and beyond -- and said "the work is really revolutionary, and it's finally reached a level of quality where it's a really compelling experience."

"That's going to do a funny thing to 3D technology," he said. Mobile phones all have powerful 3D graphics chips, which are generally only used for games; but when they're needed for more, those capabilities will be expanded.

"All these social facets of your life will be exposed in a 3D environment with rich interaction than has been the case so far," Sweeney promised. "In 10 years, kids growing up will experience the world in a completely different way than we did growing up."

And as far as the capabilities of current-gen VR and AR solutions, he used this analogy: "the hardware is Palm Pilots, [compared to] to the iPads that will be available in subsequent generations."

"What you can do on current VR hardware is not the end of it; it's the start of the revolution," Sweeney said.

With physically based rendering "now reaching a critical mass of capabilities and community awareness" and physically accurate lighting now being standardized, you can create realtime experiences with "physically accurate materials with physically accurate light."

That will blow open the potential for 3D graphics applications -- beyond games, into film, architectural visualization, and film.

Epic teased a new 3D, realtime, VR demo created by Weta Digital using assets from The Hobbit film and featuring Smaug -- for which the acclaimed effects house used Unreal Engine 4, of course. It's on display at the company's GDC booth. 

"Hi! I'm Smaug, and I represent the convergence of Hollywood and the game business. For real this time."

And it presages more of the same, Sweeney suggested: "There's a growing realization that this is the future of storytelling," Sweeney said. Storytelling, over the centuries, "evolved into movies -- and that's not the end of it, there's more beyond this."

"In order to build really compelling stories in VR, you need to take an entirely different approach" than film. These experiences will combine "digital sets with digital actors and digital performance"

And, of course, here's the punchline: "There is no substitute ... for running the whole experience live in a game engine."

He hesitated to use the word "convergence" because those of us who were around in the 1990s remember Hollywood's dismal attempts to enter the game industry back then.

But he did: "This is the convergence of all of these different forms of media," Sweeney said. "This was talked about in the 1990s; it was an abysmal failure. It's happening now, for real."

"A realtime game engine is the common substrate," Sweeney said. "Photorealistic rendering ... makes it possible."

And according to Sweeney, these worlds are beginning to clash together -- and Weta's experiment isn't the only evidence.

VR, AR, film, visualization, game developers, and everyone experimenting with Unreal tech is coming together: "We're seeing this revolution be carried out in real time on the Unreal Engine forums. Even though they're creating radically different experiences, they're using the same language, using the same tools."

And the kicker is this: Epic's Unreal Demo for GDC 2015 was a whimsical (though technically impressive, of course) scene of a child running through a natural landscape chasing a kite. If anything proves that Epic wants people outside of the game industry to take the technology seriously -- it's this.