Ambitious game designer Peter Molyneux has shown off his upcoming Kinect-driven AI game to TEDGlobal 2010 attendees in Oxford, England, marking its first demonstration in over 13 months.

Milo and Kate follows Milo, a young boy who has recently moved from London to New England. Players take the role of a new friend he meets there.

The presentation was packed full of new details about the upcoming virtual-child game. Molyneux revealed that the game will not be sold on a disk, but will rather be based on a cloud server that allows the child's AI and speech recognition to improve as more people interact with it.

In addition to teaching Milo how to skip stones, and helping clean his room via the Kinect's motion controls, the demonstration included a trademark Molyneux moral choice. Molyneux and colleague Dmitri both gave Milo consent to crush snails on a roadside, one of many personality-defining moments in the game.

“No people's Milo can be the same,” said Molyneux.

The demonstration showed amazing speech recognition, response and conversational ability, said Wired. Milo responded “realistically” in a conversation intended to cheer him up following being punished. However, it is worth keeping in mind that this was an organised demonstration.

Other parts of the demo showcased Milo's AI-driven facial expressions.

“I love these revolutions and I love the future that Milo brings.” said Molyneux at the end of the presentation.

Molyneux's TEDGlobal is at odds with recent comments made by Microsoft's Xbox PR chief Aaron Greenberg, who said that Milo is only a tech demo, and “not a game we're planning to bring to the market”.