We don’t have much info on this one, but an apparent snapshot from Microsoft has surfaced with the name Avatar Kinect displayed on it. While we don’t yet know exactly what that means, you can be pretty sure it translates to you awkwardly moving your body to play something while your avatar does the same.
However, Winrumors is claiming that there will be a separate channel for this arriving in an Xbox Live software update. Sounds plausible enough. Microsoft’s CES keynote is tomorrow, so we should find out pretty quickly.