Long term Kinect supporter, Peter Molyneux, has delivered a blow to the Microsoft’s chances of engaging the hardcore Xbox 360 crowd by deciding not to use the technology in the upcoming RPG Fable III.

Fable III was announced in 2009 and Molyneux has been keen to stress throughout its development cycle that it would utilise the motion-sensing periperhal. Speaking to the Engadget Show, however, he’s confirmed that plans to include it in the game have been axed simply because the ideas that they had didn’t quite work.

Joystiq spoke to Molyneux after the show and he told them he hadn’t ruled out DLC that features Kinect play at some point in the future.

Nevertheless, it's looking like, at least for this side of Christmas, Kinect will be aimed totally at the casual crowd for the time being.

"In this stage in the [Xbox 360] lifecycle, Kinect represents the way in which we are reaching out and connecting with younger, older, female and more family-orientated audiences," European VP of interactive entertainment business for Xbox Chris Lewis recently told MCV.

"That's not to say we are forgetting the core," he said. "From out point of view, we remain committed to that audience in terms of bringing full-blown, blockbuster games to that space: Halo, Gears of War, Fable and so on."

Sounds like even Lewis didn’t know Molyneux’s plans.