Last year at CES Microsoft showed off their 'IllumiRoom' concept, which extended the screen of your TV to the walls using projectors linked to the Xbox. Microsoft is now showing off the evolution of that in the 'RoomAlive' concept; and in RoomAlive the TV is gone, only the walls are left.
'RoomAlive' projects a game to every wall of your room, and the floor. Players can "touch, shoot, and dodge augmented content that seamlessly exists with their existing physical environment." Not only do your walls become a canvas, but objects such as your table can also become a battlefield.
You can physically touch objects in side a game on the walls and your furniture, or shoot them with a gun controller. If you want a more classic experience, you can use an Xbox controller to play as a character -- with the added bonus of having him run up and down walls.
The concept is made possible by projectors and Kinect devices on the ceiling. Obviously, this is not coming to your living room anytime soon, but it will be interesting to potentially see parts of it integrated into the Xbox in the upcoming years. Until then, we can't wait to see what Microsoft does with it next year.