It looks like Fable III, set during Albion’s Industrial Revolution, will be episodic in nature and will allow for Natal gameplay in some form. Speaking with Wired’s Frank Rose, Peter Molyneux had this to say about the game:
We’ve been working on Natal for some time – we created Milo for the first demo – and we’d be crazy not to integrate the two… You still need a controller to play Fable 3 but there are places in the world where you can use Natal, where it’s cute, funny, engaging. You don’t need it but it does enable an enhanced Fable 3.
I’ve often thought it would be brilliant to be walking through Charles Dickens’ London. It was such a dark place and very episodic too – so we’re doing that with Fable 3, we’ll give you the first big episodes, and you’ll be able to download new episodes, which is analogous to the way Dickens wrote.
The game will also feature the acting talents of icons such as John Cleese and Stephen Fry. You can head on over to read more.