An un-named development source has allegedly told Kotaku that Project Milo has been shut down.
Milo was the first piece of Kinect (then Natal) software to be publicly demonstrated by Microsoft and remains one of the most fascinating titles in development for the platform.
However, these fresh reports claim that Milo in the form that we know it has been scrapped, with the tech behind it instead now intended for use in another title – a Kinect-specific game based on the Fable IP.
Fable III, of course, famously ditched its previously announced Kinect functionality last month. The claim now will be that those plans have now been carried over to the new title.
Furthermore, the cancellation of Milo has also allegedly caused the loss of around 12 contractor jobs.
It's not the first time we've been told that Milo will never actually make it to the High Street. Earlier this year Microsoft had to move to quell fears that the ‘game' was in fact nothing more than a tech demo, and was never intended for release.
Last month a video of Peter Molyneux's TED Conference speech was released, offering a fascinating insight into the workings of the title.
A Microsoft spokesperson has told MCV that it "Microsoft does not comment on rumour or speculation".