Does Xbox's project Natal spell trouble for Nintendo Wii?

Just saw the videos for project Natal ( a new revolutionary video camera based controller for new and existing Xbox consoles. It is really great that to see that there is some competition in the new generation of console games. Even though Wii is still the true leader in this category it is refreshing to see that Microsoft will offer a comparable and even better gaming experience, while further developing its own video based technology.

As a father of a Pokémon fan, I still think that the real reason for the leadership of Wii remains in the engaging, long lasting and social games that Nintendo offers. These games have great stories behind them and a typical Pokémon game is played both on a small factor device, such as the DS(i), the Wii and most importantly on the playground with friends. A typical game/story takes months to complete. The social interaction between buddies playing the game (often using wireless) and the research a kid has to do to move to the next level using text guides, friends tips and the Internet is just so much more engaging than games with short span, such as sports games for example.

Another strong point of Nintendo is that they always have backward compatibility for their games for the previous generation. This protects the investment in games for many years. Microsoft on the other hand does not have a good record in this area with Windows and other products, so they should make it abundantly clear that after the planned retirement of Xbox, whatever comes next will have the capabilities to play older games and will be compatible with the Natal controller.

In addition to the usual sports games, judging by Stephen Spielberg's endorsement, I am guessing some of the first titles specifically designed for the new controller will be related to Clone Wars, which would be a really smart move for the game console trying to get some of Wii’s market share.

All in all this looks like a great product with tons of innovation, but I am still not certain I’ll be rushing to the store buying an Xbox… I just exhausted my gaming budget for a new Nintendo DSi, sorry…