Jason Page and Michael Kelly spoke to GDC attendees about creating next-generation audio on the PS3. In a surprising discussion, Sony's Jason Page admitted that the future of video game music may be based in technology that's considered antiquated by most: MIDI. Many developers have been moving away from MIDI to pre-recorded, orchestrated background music, but in the process, the interactivity of game music has been sacrificed.
The incredible processing power of the next-generation consoles has changed the rules of MIDI: gone are the days where MIDI sounds like R2-D2 singing. MIDI samples used by consoles can be just as good, if not better, than the samples used on dedicated synthesizers. Because MIDI loads in real-time, it retains the interactivity that composers like Koji Kondo would need, and it would allow games to load more quickly.
MIDI in the next-generation could potentially retain the same fidelity that an orchestrated score might have. With the increasing need for interactive 5.1 and 7.1 music and audio in games, the sound of "chip music" may change quite drastically in this new console generation.
[Update 1: Corrected name source: Jason Page is from Sony, not Dolby.]