Euphoria is a physics simulation suite created by NaturalMotion.
Unlike ragdoll physics which cause a character's body to go completely limp upon death or incapacitation, which can often result in silly and wholly unrealistic animations, Euphoria integrates physics simulation, artificial intelligence, and pre-made animations to work in tandem for more convincing animated behaviors.
This allows characters running in a Euphoria-enabled environment to react to applied forces and game conditions in a theoretically infinite number of ways -- while pre-made animations and behaviors may repeat, each simulation is run individually, creating a unique end result each time.
NaturalMotion's tagline for the software is, somewhat artlessly, but nonetheless accurately, "Unique Game Moments."
Characters react to different levels of exerted force from different directions, and on different body parts. This works with AI directives and conditional animations to create a more natural response than simply falling down, playing a set animation, or simply not reacting, like in most games. The engine also implements its physics system on built-in preset materials, such as wood, glass, graphite, and jelly (among others). Applied force bends and splinters wood, cuts and jiggles jelly, shatters glass, and so on.
As well as having procedural physics simulation, Euphoria takes advantage of a custom-built AI simulation ssytem. Characters are generally given a sense of self preservation, causing them to attempt to protect themselves from injury by softening falls or trying to block impacts.
Lastly, Euphoria integrates pre-made animations, such as motion-captured walk cycles, reload animations, jumps, or any number of animated sequences that may be assigned to a single part or the whole body of a character.
Availability and Implementation
So far only the Star Wars Unleashed series, games from Rockstar, and releases from NaturalMotion itself have used the tech. People may wonder "why don't more games use Euphoria if it's so great?"
Because NaturalMotion simply won't -- and to some extent can't -- let more people use it. Despite public marketing materials making it seem like a simple module or plug-in for existing game engines, the reality is a little less clean and easy.
Using the Euphoria "engine" is essentially contracting NaturalMotion to personally implement their techniques into a game in development. Though they don't publicly share what they charge, implications in communications to studios that have inquired about using Euphoria seem to suggest NaturalMotion charges at least six figures for their services.
Considering the integration of physics, AI, animation, and gameplay systems required, they almost assuredly dedicate a team of full-time software architects and engineers -- if not their entire company -- to work on a project for months in order to ensure ideal implementation of the Euphoria system. "Licensing" Euphoria is really more a matter of paying the full salaries of skilled mathletes who know a secret way to make computer people to wiggle just right.
Since using Euphoria is essentially hiring a new development branch to focus solely on making animation systems for falling down, it becomes completely understandable that so few games have used it.