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I heard somewhere that they were prerendered but made within the engine - Perhaps the video codec they used doesn't run too well on low or mid range machines like mine.
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It certainly seems to be a common issue judging by the Steam community page.
By the way, how do shadows look to you all? I have them turned up to max, but they still look quite aliased and stuttery. It's mostly noticeable in Monsaic Lines and Paramonia, as they're quite brightly lit areas.