This Tuesday's next Xbox event will reportedly feature an IllumiRoom showing.
Additionally, respected tech blogger Paul Thurrott claims Microsoft has scrapped plans to launch a subsidised version of the system. It was previously reported that the new Xbox will launch at two price points; $500 flat, or $300 with a commitment to two years of Xbox Live Gold for monthly payments of $10.
Shown in a proof-of-concept video at CES in January, IllumiRoom uses Kinect and a projector to augment the area surrounding a television screen with projected visualisations.
According to Microsoft, IllumiRoom can "change the appearance of the room, induce apparent motion, extend the field of view, and enable entirely new game experiences".
The demo video, which you can view below, shows effects such as falling snow and explosions being projected into the living room. It was captured live and is not the result of any special effects added in post production, according to Microsoft.
Microsoft will bring to an end months of speculation by revealing its new Xbox at a press conference on May 21 at its Redmond, Washington headquarters. The live stream of Microsoft's event will be viewable on CVG's ongoing Xbox Event Live Blog.
CVG will be in attendance at the press event, while its UK and US teams will be on hand to offer in-depth, up-to-the-minute coverage.
An always-online requirement for Microsoft's Xbox 360 successor has been heavily rumoured for months, with multiple sources saying the console will require one and more recent reports claiming it won't.
We analysed the most credible speculation about Microsoft's upcoming console in this countdown to the Next Xbox feature.