The video of the NewsBreaker game in an LA movie theater is now posted on YouTube. Besides the techno coolness involved, I think it is (or could have been, I'm guessing here) a case of brilliant social engineering. You don't really have to train the motion sensor or the camera on the entire audience (an exercise that must be costly and complicated). You can point it only at one individual and have the game react to his or her motions only, while people in the audience think it's their collective effort that directs the paddle -- and they wouldn't know any different unless they somehow move in perfect sync in the opposite direction.
Come to think of it, you don't need any motion sensor at all: just have the paddle move automatically according to some algorithm, and have a couple of your people in the audience to stand up and pretend they are playing to get the crowd going. In this case, it will be the paddle controlling the crowd, not the other way around. Maybe that's why Brand Experience Lab calls the game Crowd Control.