Speaking in one of his last interviews as creative director of Microsoft’s European studios, Peter Molyneux’s has told VG247 that technological ambition had nothing to do with Milo’s demise: it was all about the concept.

“The real problem with Milo, and this is a problem we had lots of meetings over, was where it would be on the shelves next to all the computer games.”

Peter Molyneux has confirmed that Milo was canned not because it wasn’t technically possible, but because the games industry wasn’t ready for a “this delightful celebration of youth”.

Project Milo – or Milo and Kate, as it was also known – was shown at Kinect’s unveiling during E3 2009 as a demo of what could be possible using camera recognition. The game featured the player relating to a young boy named Milo, talking to him about homework, playing with fish in ponds and more.

But despite the apparently huge ambition of the title, Microsoft eventually canned it not because it was high-tech, but because of it’s concept.

“The problem with Milo wasn’t the ambition,” said Molyneux, speaking earlier this month in San Francisco. “It wasn’t the ambition or the technology; it was none of that. I just don’t think that this industry is ready for something as emotionally connecting as something like Milo.

“The real problem with Milo, and this is a problem we had lots of meetings over, was where it would be on the shelves next to all the computer games. It was just the wrong thing. It was the wrong concept for what this industry currently is. Maybe this industry one day won’t be like that, but at this particular time, having a game that celebrates the joy of inspiring something and you feel this connection, this bond; it was the wrong time for that.

Subscribe to the VG247 newsletter Get all the best bits of VG247 delivered to your inbox every Friday! Enable JavaScript to sign up to our newsletter Milo and Kate. The games industry wasn’t

ready for it, according to Peter Molyneux.

“Maybe we’ll revisit that later on.”

Following reports the project had been canned, Microsoft backed away from Milo in late 2010, saying it was “never announced as a game” and it “was never really a product.” Molyneux and Lionhead salvaged much of the tech for Fable: The Journey, however.

“There was a lot of technology that was in Milo that’s now in The Journey, but it’s just not this delightful celebration of youth,” Molyneux added.

“What we were trying to achieve with Milo was this key thing: the most powerful story I could possibly tell is a story that reminds you of your own childhood. We’ve all had times in our childhood, common experiences when we felt down, and we felt up, or we celebrated doing something for the first time, and I loved that thought.”

Peter Molyneux was confirmed as having left Microsoft last week to found start-up 22 Cans. His final Microsoft game, Fable: The Journey, will release for Kinect this year.