Scaleform Being Added to Unreal Engine, UDK
In a pleasantly surprising follow-up announcement, the companies also revealed a deal that will bundle the tools into Epic's free-to-use Unreal Development Kit.
In a nutshell, Scaleform Gfx allows developers to create robust user-interface designs with hardware-accelerated vector graphics and video based in Flash. In the company's own words, it offers "scalable data-driven Flash UI elements for videos, menuing systems, overlays, HUDs and animated textures directly on 3D objects."
Just last month, Epic Games and Valve revealed the integration of Steamworks into the Unreal Engine 3, and the free inclusion of the hardware-accelerated vector graphics user-interface tool is sure to make the package even more attractive to developers.
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As cool as this sounds, I hope the hardware-accelerated-ness of it prevents any slowdown. Flash can be a crippling pain as far as speed goes sometimes.
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Plenty of games have used it already. http://en.wikipedia.org/wiki/Scaleform
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Flash is the editor you use, but Scaleform converts the graphics to a version more suitable to games. I don't think any console game is actually rendering flash data.
(Flash files are built to be as small as possible for the web, which makes them rather unsuitable for games and NAAAASTY to write a converter for. EA has it's own flash -> game ui program that took them years to write.)