Peter Molyneux must be a freakin’ genius, because he’s created the first interactive artificial intelligence seen in a game. By interactive, I mean amazing. A new video featuring a boy named Milo using the Xbox 360′s newly announced Natal. We basically see a girl named Claire interacting with a “real character” named Milo who’s seen in game.

Described as a “landmark in computer entertainment”, you’ll actually be able to talk to Milo, interact with him and in one piece of the video we even see Claire handing Milo a picture she drew in which Milo took the paper and described what he saw on the paper.

Milo is being shown behind closed doors at E3 2009 and those select few will actually be able to interact with Milo.