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Other than the height map, we use three different types of textures for the rendering of the terrain in Just Cause 2:
The normal map texture is obviously used for shading -- nothing fancy there. The benefit of having the normals stored in a texture as opposed to in the vertices is that lighting becomes invariant of mesh resolution, which helps a lot when it comes to hide LODing. The material textures are used in the pixel shader to select and blend between various high-res material texture maps. The resolution of each of the textures is four meters/texel. This is quite a low texture resolution for terrain textures, but we use tiled detail textures that modulate these to achieve a higher final resolution. This is an example of where we use procedural techniques to improve the fidelity of the data.
I won't go into detail on the pixel shader in this article, but I can say that it is quite expensive and we spent a lot of time optimizing it. In fact, the frame rate is sometimes higher when there are a lot of trees on screen because they occlude the terrain, so we avoid the rendering of expensive terrain pixels. It's an interesting situation when drawing more actually improves performance!
The source data resolution of the height map and material map in JustEdit is 4 meters per sample. The heights are stored as 16 bit values, and the material indices as 8 bits. In the PC version of Just Cause 2 we keep this format, but for Xbox 360 and the PlayStation 3 we compress the maps to 16 bits per sample in total. The compression a "lossy" scheme which takes 4 by 4 blocks of height and material samples and makes a number of simplifications of the data. The materials are simplified similarly to how the DXT texture format works, by using a table of four entries and 2 bit values for each sample used as lookup index into the table.
The height values are converted to a 3:6 floating-point format, where the 3 bit exponent is shared for 2 by 2 samples and each sample has a 6 bit mantissa. Using a floating-point format allowed us to have high precision in low frequency areas where it's typically the most needed. Packed into the block is also bounding data to optimize ray-casts. When sampling the data in run-time, a Catmull-Rom spline interpolation is performed on the unpacked samples, and high-resolution displacement maps controlled by the material map are added to the result. This way, high-fidelity height values are achieved with relatively little amount of data.
The height map can be sampled thousands of times per frame by the physics system, so it was crucial to achieve high performance on the sampling function. Therefore we use hand-tuned SIMD functions to unpack and sample the data. The VMX instruction set on Xbox 360 and PlayStation 3 is very powerful, and much of the magic was possible thanks to the versatile permute instruction. This instruction sadly doesn't exist on x86 architectures, which was one of the reasons why we were forced to have a different data representation on the PC.
So we've talked about stream patches, and how they have a fixed size of 512 by 512 meters. One can view stream patches as mere data containers that are streamed in to provide data upon request for other systems. Now, the terrain meshes are represented as a type of patches too. We call these terrain patches, and they basically contain a run-time generated vertex and index buffer representing the terrain in that area.
Terrain patches are organized as a patch system, i.e. a series of patch maps as described above. This is because there are several level-of-detail representations of the terrain mesh. There are twelve levels of terrain mesh detail in Just Cause 2. Each level consists of a patch map of 8 by 8 terrain patches, centered on the camera. The smallest level of the terrain patch maps covers an area of in total 64 by 64 meters, and at the largest level they cover an area of in total 256 by 256 kilometers. Note that this is much larger than the size of the game world; we have procedurally generated data outside of the game world to ensure that the visible distance is equal in a directions regardless of where you are on the map.
The concept of a level-of-detail pyramid of patches centered on the camera is similar to Geometry Clipmaps described by Hugues Hoppe and Frank Losasso, but we actually developed our system before that paper was published in 2004.
As the camera moves, new rows and columns of new terrain patches get constructed and old ones destroyed. Their data is either gathered from the stream patches, or from a global low-fidelity data representation, depending of the LOD level of the terrain patch.