There is a new tech demo that shows off an augmented reality system in the works call RoomAlive from Microsoft
I remember not that long ago that Microsoft was using the Kinect to create a form of Augmented Reality in our living rooms. The project was called IllumiRoom for those who don't remember or have a strong Google-Fu. The idea behind it would be that by using the Kinect and a video projector you could expand out the screen of your game to add an extra level of immersion. The Kinect would 'scan' the area to get a digital mapping of your play space so that the projector could properly display no matter the contours or set up of anyone's living room or gaming space.
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