Microsoft has unveiled its new control system for the Xbox 360 console, at E3 in Los Angeles.
Project Natal is a fully hands-free control system that will use face recognition and motion sensors to allow users to play games.
Film director Steven Spielberg, attending the launch, said it was "a window into what the future holds".
Although still in the early stages, Microsoft has sent prototypes to all the main game developers.
Speaking to the BBC, Mr Spielberg said he had always stated that "the main barrier stopping people getting into video games was the complexity of a games controller," and that Natal was "a whole new world".
"There is technology now that recognises not just your thumb, it recognises your entire person. The technology knows who you are," he said.
Mr Spielberg drew an analogy with the film industry, saying it was evolutionary step for games.
"It's like the square screen we saw all of our movies on in the early 1950s. Then The Robe came out in Cinemascope. And then came CinRam and Imax followed. That's what [Natal] is.
During the demonstration, British developer Peter Molyneux showed how Natal could not only recognise faces, it could recognise facial expressions to determine what mood a player was in and react accordingly.
Mr Spielberg said this offered new opportunities for game development
"The video games industry has not allowed us the opportunity to cry, because we were too busy putting our adrenalin rush into the controller, or wherever we swing our arm with a Wii controller to get a result," he said.
"Because of that, there is no room for a video game to break your heart. We now have a little more room to be a little more emotional with Natal technology than we did before."
Speaking to the BBC, Piers Harding-Rolls, senior analyst with Screen Digest, said the success of Natal depended on a number of different factors.
"I think the technology looks very interesting but its success depends on the content and how easy it is to use," he said.
"The other aspect is cost and how they will get it out to the user base," he said.
"That said, I think Microsoft would like to get it out sooner, rather than later.
"Sales of the Xbox 360 hit their peak in 2008 and are now expected to decline, in terms of console sales, so you would expect them to get it out as soon as possible to rekindle interest in the platform."
