So a few companies tried something similar but failed.
The Wii U seemed like a good idea – switch off the tv, only to continue playing on the screen on your controller, and do some more mumbo jumbo there.
The Sony Move concept was an attempt at redesigning the controller and allow gesture like movements to control the game, with boxing / archery and the like being just a couple of options.
However, the xbox illumiroom might actually seem to hit the nail on the head. To sum it up, it allows a separate projector to project the peripheral aspects of the game across your living room, making you feel fully immersed in the game you are playing.
Keep in mind, below is actual, non doctored footage of the illumiroom.