Peter Molyneux is making game for Project Natal

Lionhead boss Peter Molyneux is on stage demo'ing a brand new Lionhead IP for Microsoft's full-body motion sensor, Project Natal.

He created a boy called Milo who recognizes faces, emotions, words: even displays emotions.

Molyneux then drew a picture on a piece of paper and Milo pick it up in the game.

From our liveblog: "The game scanned a copy of the paper, and Milo recognized it. Holy s**t."

However, there's no date and the camera's "still very much in development. Only being shown behind closed doors."

Sounds awesome.