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The report claims that the peripheral, which will add motion control, facial scanning, and voice recognition abilities to the Xbox 360, will be sold between $50 to $80 and include 14 game titles.
In addition, Microsoft plans to manufacture five million units for a worldwide launch.
The hardware itself is a slender bar that will sit near a television to detect player movement and sound.
Menu navigation demonstrations included facial recognition to auto-login to Xbox Live and waving through menu screens.
Microsoft plans to offer Project Natal controls to compete with Nintendo Co.'s Wii, which has sold 50 million units worldwide due to its low barrier-to-entry, motion-sensitive controller.
Nintendo in Sept. price cut the Wii to $199.99.
The Xbox 360, which has sold 30 million units globally, currently attracts more core players with favorites like the Halo and Gears of War franchise.
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