If you saw Nintendo's e3 conference last year, Sony filed a patent for a very similar product...
Methods and systems for using a position of a mobile device with an integrated display as an input to a video game or other presentation are presented. Embodiments include rendering an avatar on a mobile device such that it appears to overlay a competing user in the real world. Using the mobile device’s position, view direction, and the other user’s mobile device position, an avatar (or vehicle, etc.) is depicted at an apparently inertially stabilized location of the other user’s mobile device or body. Some embodiments may estimate the other user’s head and body positions and angles and reflect them in the avatar’s gestures.
Edited by Nollog, 05 February 2012 - 03:54 PM.