"We are the creators of Doom and Quake and Wolfenstein," says id's Tim Willits. "We invented the first-person genre."

How great it must be to preface a video game demonstration with the words "we invented the first-person genre". It's a bit like saying, "yeah, you might have played - and even enjoyed - other first-person shooters, but nobody does it quite like we do, because we were doing it when you were still crapping in nappies."

But the Godfather, as fans know all too well, doesn't do things quickly. In an age when Activision pumps out a new Call of Duty game each year, and Microsoft gives us more Halo than we know what to do with, id is happy to sit back and ponder the meaning of life, love... and kick ass graphics. So here we are, in the depths of a stunning French château, about to see RAGE being played on the Xbox 360 for the first time. The shroud of mystery that has enveloped RAGE since its 2007 QuakeCon unveiling is about to be blown away.

And what do we see? Well, perhaps the best-looking video game of all time.

Gearbox Software's Borderlands is a decent enough reference point. Like Borderlands, RAGE is a quasi open world post-apocalyptic FPS set in a sci-fi Wild West - all deep south accents and heavy guitar twangs. But there the similarities end, because in visual terms, RAGE blows Borderlands, and almost every other game, out of the water.

The devil is in the detail, and the detail is fuelled by id's next-generation game engine id Tech 5. Tim begins his demo out in the wasteland, just looking around. The searing desert sun burns deep shadows on red rock. Textures buzz with detail. Shrubs sway in the wind. Water pools reflect RAGE's virtual world with crystal clarity. And the frame rate... oh, the frame rate. RAGE's world is not photo-realistic, but it is so colourful, vibrant and smooth that it seems beyond real.

Throughout Tim's demo it's hard to know where to look, so jam packed is the environment with glorious little details. A mutant - one of RAGE's demented enemies - attacks. Tim lets fly with the deadly Wingstick - a sort of killer boomerang - taking its head clean off. It snarls and screams like Gollum from The Lord of the Rings, then its head rolls away, spraying blood. Another mutant is torn to ribbons with machine gun fire, aimed at its arms and legs. It twists and turns in a maelstrom of stunning animation. I'm reminded of Killzone 2, then remember Helghan doesn't get this sunny.

Extending the similarities with Borderlands, RAGE has both driving and vehicle combat. Tim jumps into the "Buggy" - the player's first ride - and speeds off towards Wellspring, a town that serves as the main hub for the first half of the game. While driving, he runs over countless mutants and shoots down structures with twin mounted machine guns. There is an impressive sense of speed, and the game runs as smoothly as it did when Tim was simply admiring the view. RAGE, Tim says, will run at 60 frames per second at all times.

Wellspring, so named because of the well it's built on, reminds us of Fallout 3's Megaton. But where Megaton was bland and dour - deliberately so - Wellspring is alive with colour. Superbly animated people potter about, getting on with their day to day activities. Each room and wall and ceiling tells its own story: small cracks in ageing brick; smoke from a cigarette; an open comic book; torn posters; flickering neon lights; "NO PARKING" signs amended to read "No PEEING"; dust balls; Kola-Kong vending machines; blood and guts; audio advertisements; health warnings and two locals slagging off The Authority in the bar. Wellspring is one of the most captivating video game environments I've ever seen. I can almost reach out and touch it.

Clearly, RAGE looks incredible. But, as we all know, great graphics do not always make for a great game. So, the question remains: just how will RAGE feel to play? What kind of shooter is it? Does it innovate the genre in areas other than visuals? What about plot and characters - aspects that are hardly id's traditional strong areas?

For the first half of the game, Wellspring is your home. At Rusty's Auto Parts you'll buy upgraded armour and weapons. At Mick's Garage you'll repair and upgrade your vehicle. At the bar you'll pick up odd jobs. At the Outfitters you'll sell unwanted items picked up while adventuring in the Wasteland. Then there's the Wellspring Speedway, for racing, the Major's office, the Sheriff's Office and loads more.

Tim is stopped by a woman who comments on the fact that you're wearing an Ark suit. Time for some exposition: Before the great asteroid hit the earth, the governments of the world buried hundreds of Arks. You were part of the program. Now, years later, you emerge from your Ark still wearing an Ark suit. The problem is, The Authority, an omnipresent evil group, is out looking for Ark survivors for God knows what. Under the circumstances, the woman's words are actually a veiled warning. Change your get up, and change it quick.

Combat, from what we've seen, takes place in two kinds of areas: out in the expansive Wasteland, and in more traditional interior "dungeon" environments. Functionally, it's a combination of run and gun weapons fire (in a nice touch, you raise a small telescope to your left eye when zooming in using the pistol) spliced with some nifty supporting sci-fi gadgets. Underneath Wellspring, in an area overrun by thugs known as the "Ghost Clan", Tim uses different ammunition types to cause all sorts of havoc. Electro bolts, for example, allow you to fry a bunch of badguys in one shot if they're stood in a pool of water. The fat boy ammo, on the other hand, is great for blowing up canisters, and burning bandit flesh. We see some goons emerge from a blaze, screaming in pain as fire chars their skin and cooks their gizzards. Using the right ammo in the right situation is key to RAGE's combat.

If the various ammo types add spice to RAGE's Serenity-flavoured broth, then the many engineering items add sugar. These crafted items can cause some serious damage. Take, for example, the Remote Control Car Bomb: Lay it on the ground, steer it into a room full of bandits, then boom! Later, if you have the appropriate recipes, you'll be able to craft deployable turrets and small robot controlled sentry bots. Engineering items can mean the difference between life and death, so you'll always want to pick up everything and anything you find along your travels (thankfully RAGE doesn't have any form of encumbrance system, so you can carry as much as you want).

While ammo types and engineering items mix up RAGE's combat, it's the enemies you'll use them on that are of most interest. The Ghost Clan, who can dynamically path through the environment, are extremely nimble - attacking from above and below, swinging like death-obsessed acrobats. They often charge at you, wall-running to dodge your fire before bludgeoning you in the face. The Cockney-sounding Wasted, on the other hand, are much easier to handle. In the Dam Facility area where they're holed up, Tim employs flanking tactics. He deploys as many turrets as he can, trying to flush the thugs out from behind cover. The Ghost Clan and The Wasted are only two of the many bandit types in the game, but you'll always know what you're up against because they like to paint the walls with their unique tribal markings.

Tim's presentation has answered so many questions. We know that structurally RAGE follows a sort of hub and spoke design, where you pick up quests from towns and go out into the wild and other dank places to complete them. We also know that vehicle combat is more of an additional mechanic, supplementing the FPS action rather than competing with it. And we know, not that there was any doubt, that RAGE's visuals will blow away anyone who dares to look at them.

But will the gameplay match the graphics? I haven't seen one mechanic that, on its own, pushes the FPS genre forward. id is banking on that not mattering; RAGE's appeal is less about its individual ideas and more about a collective consciousness. Everything looks perfectly well executed, from the visceral satisfaction of shooting bandits to tearing across the Wasteland in the buggy, from the environmental kills that come with elemental ammo types to the unique bandit AI. These are ideas we've seen before, but rarely have we seen them executed so beautifully.

"There are a lot of unique aspects to RAGE that aren't necessarily ground-breaking in of themselves," Tim admits. "But when you put them in a whole package you need to make them work, you need to make them fit, you need to make players feel that, 'okay, it makes sense that I'm switching to this type of gameplay'. Getting it all to gel has been probably the biggest challenge. But it's been the most fun, too."

And fun, my FPS-loving friends, is exactly what RAGE will be.

RAGE is due out on PC, Xbox 360 and PS3 in 2011.