"There is no truth to this speculation," Microsoft said in a statement. "Ken's comment is in reference to rotating the left analog stick while hitting the X-button to move different things in the game."
In the video, Lobb said "you twist the controller around and it'll move different things in [Banjo-Kazooie: Nuts & Bolts]," leading many to believe that the director was referring to the oft-rumored Xbox 360 motion-sensitive controller.
Rumors have circulated since earlier this year that a Wii Remote-like peripheral for Microsoft's console, supposedly code-named "Newton", could be ready for the market as early as the end of 2008.
Reports had suggested that while the hardware is still in prototype phase, software developer kits and prototype controller units had been distributed to studios.
Should any announcement be coming, word will likely arise from Microsoft's media briefing at next week's E3 Media and Business Summit.