IllumiRoom projects images on the walls surrounding a television to induce a range of effects such as changing the room's appearance, extending the game environment and creating a sense of motion.
According to Microsoft, all effects shown in the proof-of-concept video were recorded in real time, without any effects added in post-processing.
IllumiRoom accomplishes its effects through use of a Kinect sensor and a projector. The Kinect sensor scans the room so that the projected effects contour with other objects that might be in the room, such as lamps or bookcases.
Last year Microsoft filed a patent that describes the same technology used for IllumiRoom. The proof-of-concept video shows that it is a patent Microsoft is still actively researching, and could be an indication of Microsoft's next Xbox console.
The patent also integrated with a pair of rumoured Kinect 3D glasses, codenamed Fortaleza, that would allegedly add depth to objects and environments projected onto the walls.
It is believed that Microsoft will officially unveil its next Xbox system at E3 this year.
The console was first given the codename 'Durango'. However, more recently the codename 'Kryptos' has been used in reference to the system.
Alleged patent filings for the new Xbox suggest Microsoft's next console will feature an improved Kinect device and two CPUs, one for gaming and another for multimedia applications.
The filings support some of the details discovered within a set of alleged leaked Xbox documents from 2010.
The 56-page set was removed from the web following an intervention by Microsoft's legal team.
It claimed that the next Xbox will launch during the 2013 holiday season and feature Kinect 2.0, 3D technology and the long-rumoured Xbox TV.
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Copyright: Microsoft Games