Earlier this year gaming supremo Peter Molyneux debuted what he believed was possible with Microsoft's Kinect accessory for the Xbox 360, and now, some months later, TED has released the video for all to watch.

Milo and Kate show how using the Kinect controller, your voice and a lot of AI within the program will let people interact with their Xbox 360 instead of friends down the pub.

Molyneux uses the demo to show that not only can everything be controlled with your body, but that everything has a cause and effect on the AI. Bending over for example will change the way Milo talks, while crushing a snail will have an effect on your character bringing in elements of the Fable series.

While Microsoft's launch title Kinectimals goes someway to showing what's possible with Kinect, this is bound to blow your mind.

But Milo and Kate isn't a launch title, so what do Microsoft think of all this?

"We never want to alienate the core and we want to make sure we have deep experiences for the core moving forward. I mean, you know from the TED Talks already that Peter Molyneux has got it right? He's very interested in creating experiences that are super deep", Shannon Loftis, who heads up the Good Science team at Microsoft, told Pocket-lint in an interview at Gamecom. 

Milo and Kate hasn't been given a launch date as yet, although by the sound of it Microsoft is very impressed. Either way it's an amazing demo to show what the system is capable of already, let alone in the future.