The announcement of a new Kinect-based Fable game raised a lot of questions. Is the game on rails? How will combat work? Is it as big as a full-fledged Fable game? After sitting in on a demo with Microsoft's Peter Molyneaux, we now have a better idea of how the game works.

Before the demonstrator could even pick up the virtual reigns to his horse, Peter Molyneaux was eager to clarify a few things about Fable: The Journey. First and foremost: the Kinect-only game is not on rails, as many assumed based on the E3 demo. Although most of the game does take place from the driver's seat of a carriage, you have full control over where your horse leads you. Players begin trotting by moving the reigns up and down, then steer left and right by moving their respective arms forward and backward. Although gameplay is more focused than Fable 3, it still sounds like there's plenty of content: Molyneaux says that the games titular journey will cover over 300 miles of land as players make their way to the kingdom of Albion. Luckily you won't have to worry about your legs getting tired on your adventure -- the entire game is played from the seated position.

Molyneaux stressed that your horse isn't just a tool in the game, but more of a character that players will bond with (or not, if you choose to mistreat it). The horse will respond to verbal commands, but they're not set; you can train the horse to run by saying "Let's go, girl," or "Move, you dirty old nag," or any other command you choose to say. Along the road you'll also pick up travelers who you will interact with, but an example wasn't shown during the demo.

Magic plays an important role in the game, and looks pretty good too

Another major aspect of the game is magic, which is your only form of attack in the game. During one section of the demo, the character dismounted his carriage and walked into the woods, spotting a goblin (while the on-foot section was on rails for the demo, Molyneaux says players will have some level of movement control in the final game). The demonstrator held up his hands, which activated the magic system and caused glowing lights to appear. These lights swirled around as he moved his hands, then short forward in an energy ball when he moved his arms forward, similar to the functionality seen in Sony's Sorcery demo shown for the Move at last year's E3. However, the magic system in The Journey is much more involved. Players can interact with the glowing energy in a variety of ways. For example, if you squeeze your hands together, the energy will condense, resulting in a greater explosion when you push it towards players. You can use either hand for attack, or use them together for greater damage.

The most interesting aspect of the magic system was the crafting mechanic. Rolling your hands around each other activates crafting, allowing you to perform a variety of gestures that will result usable objects. As another goblin lumbered toward the screen, the player rolled his hands together, then made a stretching motion. The energy solidified into a long spear, which the player could then move around and throw at the enemy. Molyneaux says there will be a ton of objects, and mentioned a fishing pole and telescope during the demo.

Morality is another staple of the Fable series, and Molyneaux says it will be incorporated into The Journey as well. His example (which wasn't shown at the demo) was coming across a puppy during the trip. Players could use a life leech spell to absorb a little energy from the dog, causing it to fall asleep, or continue harvesting the helpless canine until it dies. Whether there will be enough of these moments in the game to rival the choice presented in other Fable games remains to be seen, but it's a start.

Compared to simpler Kinect games, The Journey looks great, retaining the vibrant and exaggerated art style the series is known for. The particle effects used in the magic spells are also easy on the eyes, but graphics aside, I still have major reservations on how controlling a Fable game solely with Kinect will work. Molyneaux seems prepared for this type of skepticism, but insists that The Journey is a core game, and contains everything players love about Fable, with the added bonus of gameplay that a standard controller can't provide. That seems like a tall order, but with a 2012 release date, Lionhead still has plenty of road left to travel in the Journey's development.