I doubt Project Natal will kill the Playstation 3. It'll just make the competition more interesting in my opinion. Not to mention I don't participate in the so-called "console war" as I don't see one console being "superior" to another. I just see games and I play the games based on what I like; I don't play a game for the console.
The reason I say that I doubt Project Natal will be the downfall for PS3 is for 2 reasons.
1. Sony may come up with a similar device for Playstation 3 in the near future. The Wii may also come up with a similar device as well. If not for the current consoles, perhaps for the next generation consoles. But I feel this depends on how popular Project Natal actually gets. It might succeed; it might flunk. Who knows?
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2. There are likely to be gamers who prefer a controller over Project Natal, myself included. While I admit it's an impressive piece of technology, I see nothing wrong with using a controller or remote control to do the same stuff. I like to sit on the couch and play a game with a controller, not stand up and making a fool out of myself playing with Project Natal.
If Playstation 3 is "killed" at some point, I think it will be due to other factors than Project Natal. Again it is impressive and I did like the clip I first saw of it. But it's hard to say exactly how well it will do. It could do great or it could do horribly. There's no telling until the time comes for it to be released. Remember Virtual Boy? People were hyped up about that if I recall correctly, and when it was finally released, it wasn't the console they were hoping it would be. Project Natal could turn out the same way.