The current cloth physics uses a quad mesh. As you can see in this screenshot:



The physics makes the cloth fit nicely over the body. So the cloths are modeled as garments.

The advantages are that modeling and animating cloth is more easy. A disadvantage is that making cloth like coats or jackets is difficult.

A solution would be that you have a garment that "drives" a more complex mesh like a jacket. But that would mean the garment and the clothing do
have to fit nicely together making the whole package more difficult to handle.

Is this a physics engine that you created or are you using an SDK?

Wouldn't the biggest problem that you cannot enable mesh plane collision? So that different garments can collide with each other and not as now go thru.
Without causing lag that would be.

Example (Pre-render and way out of line for games): http://youtu.be/_Q5dqTHw8SI

The complete engine is done by themselfes.

Nice movie.

Cloth-cloth collision is a difficult feature to get right in real time.

We do not use hardware acceleration for the physics because it limits the engine to specific hardware.
Also the physics features like we use are hard to implement on the hardware, because it is relatively new (in real time gaming) and not very well supported on current hardware.

I would gladly see jeans in future version

As i can see you use the oldschool Cloth Plugin of Maya. Is it right that you need to create panels and stitch them together at the borders?
If thats the case, do you simulate the cloth to fully relax with maya and then export the cloth, or gets it exported like the picture shows and the engine relaxes it?
I have played arround with this Plugin as a student, years ago. At this time no CPU was able to handle cloth collision in real time as runtime of the common algorithms was n² or worse. I wonder if there exists an opensource variant of the cloth plugin for Blender.

If the engine relaxes it, what starting parameters do you use. One will need the parameters to simulate the cloth so it behaves the same in the later engine like in the used modeling tool.

Could you perhaps set up an example scene with a manequin model (Original Model with lesser details, so nobody can steal your current production Model) and a simple garment and upload it.
This would start community cloth modeling, i think.

By the way, what runtime has your cloth solver?

Edit:
A short lookup found a possible solution for Blender.
The shrinkwarp modifier.

@rezzabae

We do not use the cloth plugin in Maya.

The cloth are quad based poly meshes, so there is no need for stitching and other difficult issues. You simply create a polymesh and then use in as cloth.

Using a test scene in XStoryPlayer you can load the cloth and the character, relax the cloth, adapt it (open buttons/zippers) and then store it to a state file.
Maya is only used for creating meshes, XStoryPlayer is used for relaxing and posing the cloth.

These cloth state files are connected to the poses. So when you load a character in a certain pose, it uses the cloth states that belong to that pose.

In next version of XStoryPlayer Maya files with cloth examples will be available.

We use a custom integrator that allows for handling collisions and friction with the characters body.

Yeah marvelous designer is very cool tool