Virtual Air Guitar Company have an augmented reality beat ‘em up in development called Kung-Fu Live.
Kung-Fu Live is a camera controlled game built with FreeMotion technology. The middleware takes an image from a camera extracts the player from the background and puts them into the game. Movements like punches, kicks, and pretend lightning blasts are copied into the game.
While this game does not require the PlayStation Move controller, Kung-Fu Live requires the PlayStation Eye camera bundled with the PlayStation Move starter kit. Virtual Air Guitar has Kung-Fu Live scheduled for release later this year as a digital download over PlayStation Network.