It has been revealed that a sequel to the Xbox 360 launch title Kameo: Elements of Power was in the works at Rare, but has recently been canned by Microsoft in favor of more Project Natal-oriented projects.

CVG reports that a source "close to the platform holder," i.e. Microsoft, said that the recent company-wide restructuring saw numerous "traditional" franchise sequels get the axe. But in the case of Kameo 2, its weak sales at the system's launch didn't exactly help sway anyone's decision toward keeping it on track.

Rare is said to be "intimately involved" in the launch of Project Natal, including some non-traditional games. But when asked for comment, Microsoft delivered the usual "rumor and speculation" line.