It's NOT your ps3 / TV / Game Disc, it's a problem with the game. The flickering is in both versions (PS3 / 360). I picked up the PS3 version bc I read the 360 version had some framerate issues, and was thinking I made a mistake. So I downloaded the demo on the 360 and sure enough both had the same problem.
It has to do with the type of antialiasing the game uses from what I’ve seen. Which leads to the fact of: the larger your tv, the more aliasing you see, the more obvious the flickering becomes. I played the game on my 25″ 1080p PC monitor when I first bought it (recently moved and my tv wasn’t set up yet!) and didn’t notice the flickering, but as soon as I hooked up my 50″ 1080p set I immediately noticed the flickering. I tried the game at a friends on his 42″ 1080p set and it was not quite as noticeable, so unfortunately the bigger your tv the worse you it appears. It gets even worse if you have the “sharpness” on your set turned up….I found that by turning it way down it was less noticeable.
When you stand still there’s some very fine “highlights” shown in the environment and on the edges of foliage, but when you move the highlights go away, but when the camera pans slowly its alternates from displaying the highlights and not displaying them. I recently was in a room in the castle that had icicles that were whiteish on a dark background and nearly got a headache…the worst I’d seen. It's a bummer because I love the game, but you gotta live with it unless they put out a patch. If you do a google search for Lords of Shadow Flickering you'll see there's a ton of discussion of this.
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