Phil Spencer has said Milo is "a vision of what's possible with Kinect", and the public will continue to see innovation from Lionhead come to market, but he's not convinced it will be "under the idea and framework" of Milo.
"We never talked about it as a retail game"
Speaking with Joystiq during TGS, the Microsoft Games Studio boss said it's possible the Milo tech will eventually make its way into the Fable franchise, but only if it makes the games better.
"If I had to bet, which I guess I do, I think you will see the innovation that that team put forward come to market, absolutely," said Spencer. "Will it be under the idea and framework of Milo? I'm not as convinced of that.
"In the case of Milo, the project wasn't leaked to the press; instead, it was put on stage at E3 as a vision of what's possible with Kinect. We felt like we wanted to put it on stage at E3 because it showed a unique use of Kinect.
"We never talked about it as a retail game or as a game even. We did that deliberately. People don't believe us, or didn't believe us then, but we did that deliberately because we knew, 'Is this really going to come out as something called Milo?' I don't know.
"In the end, if it makes Fable better, that's a win for us. That's great. Did parts of Fable show up in Milo? Absolutely. Will parts of Milo show up in future Fables? I absolutely expect that they will, and that's the kind of circular path that most of the creative teams go through."
"We could have done some trivial, gimmicky thing"
Molyneux told VG247 at gamescom Lionhead could have incorporated Kinect support into Fable III if the developers wanted to include "some trivial, gimmicky thing" or "some side, gimmicky thing", but Molyneux didn't think it was the right thing to do.
"If we’re going to do something with Kinect on Fable it should be brilliant," he told us. "It should be as good as it can be."
Molynuex even mentioned during his TED talk in July, that Microsoft didn't have any plans to release Milo.
Milo rumors and no comment
Earlier this week, there were rumors of layoffs and the cancellation of Project Milo circling the net. When contacted, Microsoft gave VG247 the standard "no comment" reply regarding the matter.
However, during TGS, all seemed to be well and good in the world with Lionhead, with Spencer telling Joystiq the Milo team was still in-house.
"The [Milo] team at Lionhead, under Gary Carr working for Peter, they're still there, yes [...] and they're working on technology," he said. "But I want to make sure what we're delivering a very understandable consumer proposition with what we're putting forward."
Originally known as Project Dimitri, Milo was one of those "off-the-grid incubation" projects that started "before Fable 2," which is something not unheard of at Lionhead.
At GDC in 2009, Molyneux gave a talk about how he proposes each team member come up with something creative and submit it to him, and how there's always some sort of behind-the-scenes project going on at the firm because innovation never stops at the studio.
So, it looks as though Milo - at this point - was just a way to show the world just how innovative Kinect is, and how imaginative and creative Lionhead can be. That's just going to have to be good enough for now, we guess.