Project Natal Announced, Lionhead Studios Using It

Microsoft's big announcement during today's E3 press conference was Project Natal - a device for the Xbox 360 that will feature state-of-the-art voice recognition and facial recognition technologies. Rumored to make its debut as the "Xbox Fluid", Lionhead Studios is already experimenting with the device to do all sorts of crazy stuff:
Today Peter Molyneux came on stage at the Microsoft E3 Press Conference to demo what his studio has been doing with project Natal. This is the new motion sensing camera and facial recognition controller that Microsoft showed off today at the press conference.

His demo included a real person named Clair interacting with a virtual boy named Milo. The boy recognizes the person talking to him, he responds with different emotions based on your facial expressions. Clair can draw a picture on a piece of paper, show it to the screen, and Milo will recognize the shape and color of the drawing and react to it. He also takes the piece of paper into the virtual world. Players can interact with the virtual world by doing things like putting on goggles and looking into a pool of water.
The device doesn't have a separate controller - as Microsoft put it during the conference, "you are the controller." Full body motions, facial expressions, and gestures will be picked up by several cameras within the device. Additionally, the device will log you into Xbox Live based on your appearance and/or voice. Think Minority Report.

Per Microsoft's press release:
Unveiled for the first time to the public was "Project Natal," pronounced "nuh-tall" and a code name for a revolutionary new way to play, no controller required. See a ball? Kick it, hit it, trap it or catch it. If you know how to move your hands, shake your hips or speak, you and your friends can jump into the fun. The only experience needed is life experience.

Compatible with any Xbox 360 system, the "Project Natal" sensor is the world's first to combine an RGB camera, depth sensor, multi-array microphone and custom processor running proprietary software all in one device. Unlike 2-D cameras and controllers, "Project Natal" tracks your full body movement in 3-D, while responding to commands, directions and even a shift of emotion in your voice.

In addition, unlike other devices, the "Project Natal" sensor is not light-dependent. It can recognize you just by looking at your face, and it doesn't just react to key words but understands what you're saying. Call a play in a football game, and players will actually respond. Want to log onto Xbox LIVE? Simply step in front of the sensor.

"The next step in interactive entertainment is to make the controller disappear," said Steven Spielberg, visionary director and producer. "With 'Project Natal,' we'll see games that bring everyone together through technology that actually recognizes us."