On Monday, Microsoft demonstrated an upcoming Xbox 360 add-on that lets players interact with games by moving their hands and bodies in front of the screen--similar to the way that people can play games on the Nintendo Wii. But the major difference between the two consoles is that the Xbox 360 upgrade doesn't require a controller at all. Instead, the system, named Project Natal, comes with a camera bar and a microphone that sits above or below a television set to record players' physical activity.

According to a CNET report, Project Natal will work with "all current, past and future versions of the Xbox 360." However, the add-on has no official name, price, or release date, and it's being called a "concept for the future."

Microsoft is late to the game in terms of camera-based interfaces. Sony's Playstation 2 and 3 support camera add-ons that players use for physical games and video chat. And Softkinetic, a Belgium company, is working on a similar whole-body gaming system.

Controller-free gaming technology has existed for a while, but it has suffered from a few challenges. Pinpointing multiple players and correctly identifying distance from the camera can be difficult. The image-recognition software that analyzes the video stream must be fast enough to respond to a player so that there's no perceived lag. And there's also the question of whether people want to interact with their games without any tactile feedback. The Wii, which has proved to be incredibly popular, offers a variety of controllers that let people hold on, press buttons, and feel a vibration. A gesture-based game with only visual and audio feedback may feel flat.

It's worth noting, too, that even proven gesture-based technology doesn't guarantee success in the gaming and display market. Last summer, Samsung and Reactrix Systems, an interactive advertising company founded in 2001, announced a partnership to integrate cameras into Samsung displays for gaming. But in December, Reactrix liquidated all of its assets.