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Yes, it does. It's going to be more like performing on stage or an actual music video. There's dance breaks, and there's singing parts, both in the same song. You also don't need a microphone since you have the kinect.

The game will have an on-screen projection of you, and apparently it differentiates loose clothing and long hair from the actual player movements. At points during the songs, fireworks will actually shoot from your hands on the screen and such. Supposed to be actual immersion instead of just watching a low-budget music video. I loved the wii version when I played it on Christmas, but I am waiting on the kinect version for myself.