Come on E3 2013!

Well I think it would depend on how much tech and research currently exists for something like this or if MS are doing most of it internally. For Kinect for example MS had to licence camera technology from an Israli company, purchase a 3D video camera company and a semiconductor company to produce the 3D sensors to make Kinect a reality.

These companies had done research and development surrounding the Kinect hardware tech already, so it was simply a case of MS reaching out and making some aquisitions and hammering out deals to secure the hardware.

As for the software, Rare created that. So this time around Rare may be working on the new tech involved in this and perhaps the other aquisitions MS made have shifted development to this as well.

Either way, I would still imagine even the software required for something like this might be a few years off at least.

Edit: I made a few mistakes in my first post.

Not all living room dimensions are the same, and not all living rooms have free wall space. This won't work at all unless it comes with white screens that you lay out to form a big box around yourself in order to--

No, this won't work.

I had immense trouble playing "Hole in the wall" on my friend's Kinect because there was a table in the way of where it wanted me to stand to get into some of the more obscure spaces. That was after we'd set up the playing space thinking we had enough room by pushing the table against the wall.

The premise sounds interesting enough. And you never know how well something is going to 'take off' - this may well be the next big thing. But it sounds really impractical, and would have to be implemented pretty flawlessly.

Kinect was not never before seen technology when it arrived. We had already seen technology in the past (eye toy) that can provide controller free gaming.

I think I may be thinking of a different thing though. My interpretation of this is that it is similar to virtual reality in that you are placed in the game. That is years off, but if it's simply a projection then I don't see how it could work well. 

Wouldnt something like this require a lot of processor this?

Cool, could be part of the plan from Microsoft's home of the future

http://www.youtube.com/watch?v=ODpReoKQVXM

this, the idea is kind of cool but being dependant on walls is too limiting.  my gaming room isn't square, has window sliding doors to the deck on the left and effectively no wall to the right (~ 30ft of hallway to the living room).  Also, my walls are painted a dark shade of blue, i'm not repainting to boring old white for a game.

cool idea.  not practical.  could be fun in a showroom though where the room is "controlled".

Kinect needs a physical controller. I just cannot game by flailing my arms around. Fundamentally that's my problem with it.

Projecting images onto your living room wall doesn't change that problem at all.

The Playstation Move is honestly the best of all these motion gimmicks, it can even sense depth, which the Wiimote can't, but it isn't supported as well.

Also how does this tech work if you have a picture on your wall? You have to get up and take down all the pictures on your walls everytime you want to play? What happens if you're in a room where one wall is longer that the other? Or there's a fireplace in the middle of the room? Or a window? Etc. etc. etc.

Holodeck porn. Really that's all I want.