I'm not a game developer, but isn't it already possible to use the GPU to decompress files? Why is this something only the CPU can do?
I think the current (game asset) compression methods are only suited to general purpose CPU cores, and as stated in the slides, new ones need to be developed for GPUs to be any good at it (or be able to perform without affecting the game performance negatively).
It also looks like they are storing the compressed files in VRAM which would eat up VRAM for files the game cannot use.
The data has to be in memory before the GPU (or CPU) can process it. Without memory as buffer, the CPU/GPU would spend much too much time waiting for data to trickle in from the (relatively) slow NVMe device and PCIe bus. If there is memory pressure, the compressed data can always be discarded when it's no longer needed.
I could also see the benefit of keeping compressed data in VRAM, and instead discarding unused uncompressed data sets. If decompression is easy and doesn't affect game performance, any data needed could then be quickly decompressed again without ever going to NVMe or the PCIe bus. This would be an actually working version of the "double your RAM" scam compression software of the past.
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Also, they're not storing compressed files (as in up to 1GB files in the game installation) in memory, but compressed data. A game can pick and choose which parts of a file to read to memory, based on the locations of the assets it needs. This means the memory usage is only as much as the level requires. The large file sizes in games are mainly due to how file systems are so much better at handling few huge files than thousands of small ones; especially if using a hard drive.
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I worry that Microsoft will attempt to tie DirectStorage to UWP somehow... :-(