Desert Diner is a canceled First-Person Shooter tech demo developed by Tarsier Studios in 2006, exclusively for PC. As we can read on Gamespy, the demo took place in an abandoned diner located in the Mexican desert where you could interact with the environments, thanks to the PhysX processor of AGEIA:
An action-packed sampler level designed to show off the hardware-accelerated PhysX engine, Desert Diner is a First Person Shooter located in a deserted Mexican truck-stop. This one-level tech-demo includes a massive number of unique rigid bodies, advanced cloth simulation and jointed systems that enables the spectacular destruction of the Mexican truck-stop town.
By looking the few screenshots currently available, it looks like the demo was somewhat similar to the game CellFactor : Revolution, another project whose main feature was the interaction with the environment, again, provided by the AGEIA processor PhysX. The weapon and the HUD visible on the pictures are in any case the same as in this title.
Unfortunately, that demo totally disappeared after its announcement, back in December 2006. Therefore, we do not know why this was never materialized. CellFactor : Revolution, to which Desert Diner could have been considered as a mod, was released on May 8, 2007 and was met with mixed reviews from the press. Tarsier Studios is still around to this day, and well known for their Little Nightmares games.
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