[Current Gen] Why does the PS3 have such ugly FMV?

[Li Tan]

I just finished Arkham City, on PS3. Great game, but the in-engine sequences were better than the FMV.
I have also noticed it on XCOM which I just started.

It's blocky and looks badly compressed. I thought Blu Ray would have been the solution to this s***.
Do X360 games share this problem?
If so, why? And why not just keep it in-engine?

 

[blue]

Depends on the game. Sometimes the devs take advantage of the additional disc space; sometimes they do not. See FFXIII for example.

 

[The Wolf King]

I seem to recall that being a problem with Arkham on the 360 as well.

 

[Li Tan]

Maybe Arkham was a particularly bad offender.
Mostly I have been playing games like GTA that use in-engine cut scenes so I never noticed it.
But I was quite disappointed to see the opening sequence of XCOM where they show the Firaxis logo using horrible compression too. Surely those first few moments are pretty important as far as initial impressions?
I don't care too much since I don't even like cutscenes most of the time. Just a curious question, really.