Yep, it’s called Milo and Kate. And it is a game. Peter Molyneux’ Project Natal title, announced yesterday in the Microsoft E3 conference, features a 10 year-old virtual boy and a dog. On a screen. That you talk to.
Kotaku’s posted some impressions of it here, and Eurogamer’s just gone live with an interview with Molyneux in which the developer confirms this is what used to be called Project Dmitri. So now you know.
Go for a read. Please.
Update – Here’s Joystiq’s take on it.