Unfortunately, the marketing isn't quite right. See, gamers are keen arm-chair technologists, and so they're always going to be skeptical toward over-hyped technology.

This is why it's ever-crucial that game companies show actual gameplay footage in their trailers. Gamers need to see exactly how it will work before shelling out $59.99 for a game or $89.99+ for a game-plus-new-controller. Gamers will trust a grainy, homemade YouTube before trusting an HD marketing video from Microsoft.

Likewise, the thought on many gamers' minds while seeing Project Natal is, "Yeah Right." You can make any controller look "game-changing" in a studio. Plus, we've all seen game companies try to "change the way we play" only to be sorely disappointed.

I did some research to see how it works. Apparently it consists of a Wii-like horizontal sensor with a built-in RGB camera, depth sensor, and multi-array microphone (from wikipedia's entry on Project Natal).

Reading that far, I was still skeptical. "Big whoop," I thought to myself. Then digging furthur, I found that it uses a time-of-flight camera. This is a camera that measures distance by illuminating a scene with short light pulses, then measures the time it takes for the light to reflect back. The longer it takes, the farther it is. Now, light travels realy fast, but recently processors have become fast enough to make what amounts to a 3D Scanner cheap enough for consumers.

The technology in Project Natal was created by 3DV Systems, which Microsoft bought in March 2009. Their website is still up, and it has some pretty awesome videos:

These are the kind of low-quality, but trust-worthy, videos that make you really think "Wow." They give you a sense of how precise the time-of-flight camera technology is. By showing how it works, it makes Project Natal seem like something that could actually happen.

Still, I'll believe it when I see it.

Update: Andy Baio sent in this link from someone working on Project Natal whose testimony further grounds this project in reality.