As of right now, games are really just on the cusp of physically-based rendering. Even though the VFX + Film guys have been doing it for years, we're still figuring the best ways to apply it real-time rendering. And for the most part, we're also still stuck within the hardware limitations of current-gen consoles and haven't even scratched the surface of what DX11 hardware can do.

Anyway my point is that even though Square-Enix obviously didn't invent using physically-based BRDF's + material parameters and they didn't create some sexy , acronym-ed, screen-space technique it doesn't mean that they're not treading into unknown territory. I've never seen a real-time engine so closely match photo references (although I would probably hold back my true judgement until seeing some higher-res screenshots/videos), and I'd absolutely love for them to share some details about how they achieved those results.

they didn't create some sexy , acronym-ed, screen-space technique

We don't know that yet ;)

I was more interested in their press release when they said that the engine was easily scalable to large and small projects. I'm interested to see more of what they mean by that.

The important thing to note is that it's a press release - it's not designed to impress the interwebs or game developers, it's designed to impress their shareholders who want to know that their internal (not to be licensed) R&D investment is making progress. That's all.

Can someone shed some light on what the hype is all about and why Square Enix chose to present their new engine this way?

There is no hype, only Internet comments (which, as shown by the comments on any YouTube video, are the most retarded form of human thought).
They're presenting information in the way that large companies do - imagine some legal/marketing/business jerks trying to describe the progress of internal engineers/researchers. That's how press releases are born.

If you're interested in an engineer's perspective, their research publications page contains details on different aspects of their new internal tech, mostly about animation systems and tessellation schemes.

I think it's too early to say what this is from the demonstration. It might be cool, it might be a dud.

@froop
yes its impresive
(formating off <-- hint to this mesaging system)
hell its more impressive than this text which is bold,linked (even though I try to turn it off, note - to forum maker u need a 'cancel formatting button' ATM its as bad as that turkey MS Ofiice aka I will format everything u type, unless u promise your next 5 children for satan)

well in the end there is no formatting ( a major bug) but all good
hats off to the square enix guys

Could that be based on "Approximate Bidirectional Texture Functions"?
Can someone please link the research publication page? Looks like I'm google-retarded today.

N.B. it's in Japanese, and there's not much info on their lighting/shading systems. It seems to have been mostly published for use by an internal conference, and not as some kind of grand-reveal / tech-show-off as the OP suggests.
http://www.square-en...library/dldata/

You can also glean some information about their internal tech direction from the recruitment details:
http://www.square-enix.com/na/careers/getech/

square enix,

thank you for quit creating jrpg-s and dancing lolis in white panties.

more cookies remains for me.