Project Milo was one of the more original Kinect games, but it’s also been rumored to be cancelled on more than one occasion. A more specific rumor has come out, saying that 19 contractors were let go when development halted.
Lending even more credence to the rumors is that the two Kinect teams at Lionhead will merge into one. Some of the technology designed for Project Milo will now go into a “Fable themed Kinect game.
Source: Eurogamer