Pedophiles around the world are mourning the rumored cancellation of Lionhead Studios’ overly ambitious “real life boy” simulator, Milo.  For those of you not aware, “Milo” was announced as a virtual child who you could interact with using your Xbox 360 Kinect, helping him with homework or drawing pictures for him using the controller-free camera system.

However, the closing down of the Milo project is more importantly starting to show one of two things: 1) either Lionhead Studios’ bombastic and legendary game designer Peter Molyneux is starting to hedge his bets or 2) we should start being concerned about the future of “hardcore” gaming titles for the Kinect.

It was only a few months ago that all was still well with the Milo project, with Molyneux demoing the title in England at the TEDGlobal conference.  He promised such things as Milo using software that used “psychological techniques”, talking of how this project would “…revolutionize storytelling”.  Molyneux has a long and storied history of promising the stars and instead, delivering a shoebox diorama of the solar system (I can appreciate the man’s enthusiasm for his craft; at least he does reach for the stars).

Cut to September, when it was learned that Molyneux’s flagship title, Fable 3, would not support Kinect as it was originally promised at launch.  It was rumored that the development team felt Kinect “did not meet the expectations” of what they wanted it to do in the game.  At this point, they are still hoping to bring Kinect support into Fable 3 following the game’s release.

However, now with the dissolution of the whole Milo project that was going to “revolutionize” gaming as we know it, one has to raise a skeptical eyebrow at the Kinect system as a whole.  Sure, it’s going to be a great series of party game collections, but if Peter Molyneux and Lionhead are looking at the controller and taking three very large steps backwards from it, what does that say for future “real” games on the system?

I can understand Lionhead not wanting to tarnish Fable 3 by having a series of Kinect-style minigames stapled onto the game.  I can’t imagine too many developers are willing to risk two solid years of development time and dollars only to have Kinect launch problems ruin their attempts at putting out a Game of the Year contender. However, for Project Milo to get cancelled on top of the withdrawal of Kinect support from the game is starting to point at some very ominous signs for Microsoft’s Kinect.