Disadvantages

Requires larger media storage. Although compressed, each MegaTexture remains fairly large. John Carmack has already admitted that their next game, Rage, using a 2nd generation MegaTexture will require two DVDs. This is a problem for the Xbox 360 if the gameplay can not easily be broken into separate parts. For example, a game like Oblivion would be very hard to make work with two DVDs.

Requires CPU for run-time tile decompression & tile DXTn compression. Streaming is becoming more and more important in today's games but MegaTexture requires additional steps to load. On the other hand, CPU cycles saved by lower batches offset this.

Higher quality mip-map tiles fade-in is noticeable (alternating spectating player for instance) but graceful. On an Intel Core 2 Duo @ 2.4Ghz the fade is a fraction of a second.

Arnout: The faster the machine is, the less noticeable. We could have blocked a player from flicking through spectators quickly and 'preload' the data, but we decided that responsiveness is more important than graphical quality in this case.

Because tile stream is tied with locality, sniper rifle zoom and similar will not stream higher quality mip map tiles.

Arnout: This isn't a bug, but indeed one of the disadvantages of the way the Megatexture works in ET:QW. A full virtualised texture solution should solve this problem.

The following images demonstrate this. As the zoom factor increases, the quality of the MegaTexture remains the same while the normal textures in the lorry and warehouse improve.

Doesn't allow for selective texel density to have higher texture resolution in places the players will notice more, lower texture resolution for far-away places the players can never reach.

Arnout: We have variable compression for these situations instead. And it would be really easy to add a feature where the texture compression tools would leave out tiles for lower mip levels during the Megatexture creation if they are marked as an area that the player would never see from close-up. Because ET:QW offers the player so much freedom in movement though, we didn't implement this option. If you would make a more linear game it is an easy thing to add.

Texture coordinates point to a 2D grid. While the terrains in ETQW are not pure heightmaps, with concave cliff faces, they still map fairly closely to a 2D grid because that's how the MegaTexture stores the UV mapping information. The 2nd generation MegaTexture John Carmack is creating for his next engine does not have this limitation and can be applied to arbitrary geometry with no UV stretching.