The add-on will offer features such as auto sign-in for players to Xbox Live (based on complex facial recognition), and sports extremely detailed body tracking which will be able to follow the individual movements of separate limbs. During the press event, the company demoed a painting app, which lets you use your entire body to handle virtual painting supplies, allowing you to do things like throw buckets of paint onto a canvas. Another title was shown off which featured a woman interacting with a young boy on the screen -- one of the company's creepier demos in recent memory. Unfortunately for us, Microsoft says the device won't be released during 2009. We're working on snagging some face time (literally!) with a demo unit, so stay tuned... E3 is off to a wild start!
Update: Video added after the break!