http://www.dcemu.co.uk/nintendo-s-holodeck-revolution--13202.html

Turning your whole living room into your video game would be INCREDIBLE. My guess is that this will find its way into Nintendo's next console. We already know they have been working on their new system, and we know Nintendo is all about innovation, so i think this may actually come to life.

Didn't they sort of do this with the Wii already? Watch a friend play a game for the first time on it...

Didn't you know?  Nintendo pulled that off way back in the NES days!  It didn't work out quite right, though, as you can see here.

He could also have been talking about the stuff we saw in that VR video for Wii.

Lol @ video

"It's convenient to make games that are played on TVs. But I always wanted to have a custom-sized screen that wasn't the typical four-cornered cathode-ray-tube TV. I've always thought that games would eventually break free of the confines of a TV screen to fill an entire room. But I would rather not say anything more about that."

I dont think he meant the wii controls.. It sounds to me like he wanted sometype of special screens that will allow for maybe a hallographic type environment... I remeber a quote that said something along the lines of not wanting to use split screen for multiplayer.. hollographic would allow for each player to have their own environment which is what i think he means.. 

@thekitchensink

do you mean the Nintendo On video?

I don't like the idea of home based VR. Good games can go on a TV, why? Cause there's a certain level of consistency. Even though Vs might be any size, the ratio is generally the same. you have standard or widescreen. 2 choices.

With a room, you don't have that level of consistency. bedrooms are set up different than bathrooms and some living rooms might have the furniture at the edges and another might have the sofa in the middle across from the fireplace.... on and on with the number of variables which just don't work out for that.

But what I DO see as being possible is once those video screen glasses come down a little more in price. Just add a motion sensor and headphones, then have perhaps a Wiimote style setup for the controllers. By then, SD and Flash cards should be much higher in storage size and cheaper in price, so use those for the game storage. Then it could potentially take the place of a home console AND a portable console.

@Summaro: No, the one where the guy wore the glasses and the images popped out at him.

That would've been Johnny Chung Lee's head tracking demo using the Wiimote as a camera instead of a pointer. The guy's a genius, and it would be cool if Miyamoto had been thinking along the same lines as Mr. Lee did when he devised those ingenius uses of the Wiimote.