Overshadowed by the news coming out of Apple’s Special Event on September 1st about iTunes 10, Apple TV and the new lineup of iPods, Epic Games’ announcement of its upcoming title for the iPhone, iPad and iTouch quietly changed the way many people look at the games market for mobile phones. The game, tentatively called Project Sword, will at the very least feature a social gaming network, allowing you to challenge friends in online multiplayer, and third-person sword-based combat, controlled by making flicking and sliding movements across the screen in vertical or horizontal directions. All of this isn’t too groundbreaking, but the real star of the show was the graphics, which look they belong on a genuine mobile gaming platform like a Nintendo 3DS or a Sony PSP Go.

These graphics are stunning. A tech demo called Epic Citadel shows off a gorgeous fortified city, with well-rendered cobblestone streets and cathedrals, reminiscent of Stormwind in World of Warcraft. Epic Citadel, as well as Project Sword, run on Epic’s Unreal Engine, which looks to completely shatter expectations of how a game should look on a mobile phone. The lighting and texture effects are what I would have assumed to be impossible on a mobile phone before seeing this announcement. The tech demo is free to download, which allows you to run around this small world and look around from a first-person perspective at the wonders that surround you. Just one look at one of the screenshots above should tell you all you need to know about how big of a game-changer this game is going to be. Those screens are from a game on an iPhone 4!

Many people have been reluctant to accept the iPhone and other smartphones as legitimate mobile gaming platforms, often because of the simplicity of games released, in terms of gameplay and graphics. It was not thought proper to consider these smartphones to be in the same market as the 3DS or the PSP Go, but Project Sword looks like it might be changing a few minds. If the iPhone 4 has the chops to be able to run something like this, the bar has been raised for complexity in general on all mobile phone games. If Project Sword finds success, I would expect many big name publishers and developers to start taking a much more serious look at creating mobile phone games. I think this could usher in a mobile gaming renaissance.

Granted, from the video provided of the developer showing off the game, the gameplay itself looks fairly simple, as directional dragging and swiping have already become standard gameplay devices on mobile phones. Still, I think that if graphics this impressive can be made, more advanced gameplay can only be a few steps behind. It might even get Apple and other smartphone companies to start focusing more on gaming when developing new products.

My only concern as of now is battery power: app-based gaming on smartphones tends to drain the battery very, very quickly, and a game with graphics like this I can only assume will drain it even faster. If you need to constantly have a charger with you to play the game for an appreciable amount of time, it casts doubt on whether or not the game can even be considered “mobile.” We’ll find out for sure when Project Sword hits the iTunes store later this year.