new natal interview: http://www.eurogamer.net/articles/e3-project-natals-molyneux-and-milo-interview?page=2
Pretty damn amazing.
Eurogamer: So what can Milo do?
Peter Molyneux: Milo can recognise the emotions on your face and the emotions in your voice. He can recognise certain words you say. You can have conversations with him, you can read stories to him. We're trying to bring all these things together. Some of them are tricks - I'll be absolutely honest with you - to make you believe Milo's real.
He can recognise what you're wearing. If he notices you've got dark bags under your eyes he will say, 'You look tired today.'
Eurogamer: Really?
Peter Molyneux: Absolutely, all of that works. We're combining all that together to make you really believe that he understands what you say.
Let's try an experiment. When a human voice says something funny, there's a different tone in the voice. Even though Milo's not trained to recognise your voice, if you say something funny to him, he should recognise it as something amusing. Try it now.
Pretty damn amazing.