All of that actually happened. Does this all sound like an industry's desperate, final plea for attention? Because I'm pretty sure it was. Let me back up a little bit.
The games industry has had a massive problem from day one, one that nobody is quite sure how to fix. This problem is the reason thousands of arcades had to close down after the 80s, and it's why Atari, Sega, NEC and countless other electronics giants had to bail out of the console business after losing millions. It's the reason why even Microsoft has lost billions on its gaming division.
The problem is that video game players simply won't keep playing without a new gimmick every five years or so. Where people have been happy watching celluloid movies for like 80 straight years, for whatever reason gamers won't keep playing games unless given a completely new format every half decade.
Now, some people mistakenly say, "Well, duh, we stop playing the old games because the new ones have hit the market, making the old ones look obsolete!" Not so. We stop playing the games long before the new games arrive. For instance, there are no new consoles on the horizon now, yet video game hardware and software sales are both collapsing. Eventually we just get bored with the medium.
That's a huge problem for the industry; it costs billions to develop a new console from scratch. It's getting to the point that game makers can't make a profit off the last console in the five years before gamers have given up on it and started demanding a new one. Which brings us to the animatronic elephants.
See, the console that "won" this generation was the Nintendo Wii, because Nintendo 1) designed it primarily to cost very little and 2) introduced gimmicky motion controls and other peripherals that made the console seem like easy-to-get-into fun for the whole family. You can stand in your living room and wave your arms around for an hour and have a great time. But going on four years later, people are starting to get tired of that, too--the Wii's sales are plummeting like everyone else's.
But this gave Microsoft and Sony both the bright idea that, instead of bringing out expensive new consoles at the five-year mark (the Xbox 360 has been out since 2005) they'd just introduce their own motion control gimmicks, and sell it as a whole new machine! With Microsoft, this device is called "Kinect" and it was the star of the first day of E3.