Milo and Kate, the demo to show just what Gaming mastermind Peter Molyneux and a Microsoft Kinect for the Xbox 360 was capable of producing, has been canned according to sources close to the situation.

According to gaming site

"Development on Lionhead's motion-sensing relationship simulation was officially halted yesterday, with '19 contractors' let go, according to a source claiming to be close to the situation".

But it's not all bad news for the gaming tech, the site is reporting that Lionhead Studios will be using the technology in a "Fable themed Kinect game", which if you've seen the demo should fit in quiet nicely.

Interestingly Molyneux told Eurogamer Project Milo was on.

"Of course!", he said when asked whether we'll be able to buy it in the shops at some point in the future. "I wouldn't be working on it if I didn't hope that to be true, yes".