In 2004, EyeToy inventor Richard Marks gave a presentation to discuss what he had learned in his 4+ years of research for the PS2 camera. At one point he and Sony were even experimenting with the Z-Camera from 3DV, the same company Microsoft bought in 2009.
At 1:07:03, Marks shows a Breakout-like game using the Z-Camera and a PS2. Journalists speculated that this could have been the basis for the next-gen EyeToy for PS3, but Sony instead opted for a 2D camera with smaller performance upgrades, and the rest is history.
Other interesting moments:
25:00 - March 2000 demo shows primitive one-to-one tracking with a colored wand.
1:07:45 - Richard Marks admits that the Z Camera alone isn't accurate enough for a game like golf, saying, "You could get a rough interface," but "I don't think (a golf sim) would be a good idea."