Rumour - Milo and Kate cancelled at Lionhead [Update]

Update: "No comment" from Microsoft.

Original: Lionhead's long in development Kinect project Milo and Kate has been cancelled, according to a report from Eurogamer.

19 contractors have apparently been let go because of its cancellation

The tech that's been built for the title will live on, according to the report, in a Kinect title built specifically for Fable, with two teams now working on the franchise.

Molyneux was coy as to if we'd see Kinect support in Fable III at all when speaking to VG247 at gamescom last month, having previously confirmed it would not be in the game day one.

Milo was first announced back at E3 2009, when Kinect was announced as Project Natal.

Microsoft's Aaron Greenberg said back in June the title was a tech demo, and was not being planned for release. He later clarified it was still in development, but it was not a product "we plan to bring to market this holiday."

Back in July, however, Lionhead boss Peter Molyneux showed off the title proper for the first time at a TED Global talk in Oxford.

Like Greenberg before him, Molyneux said at the TED talk Microsoft had no plans to release the title.

We've emailed Microsoft.