In a magical new video, Microsoft blurs the line between science fiction and reality with an extraordinary demonstration of the Microsoft HoloLens.

The Redmond-based company's Interactive 3D Technologies (I3D) team showed off live holograms projected by the augmented reality headset, calling the process "Holoportation."

In the clip, research manager Shahram Izadi interacted with a developer from a different spot within the building using the Microsoft HoloLens, giving the impression that they are in the same room.

To further show what the Microsoft HoloLens can do, Izadi communicates with his daughter with the headset and watched the little girl play with her toys as if he was actually with her.

The more mind-blowing part about this is that this whole interaction was recorded and can be replayed. With the Microsoft HoloLens on during playback, the wearer can, in the words of Izadi, "[walk] into [this] living memory."

The recording of the Microsoft HoloLens-produced hologram interaction can even be shrunk down to diorama size and be set up on a table or another convenient place for playback, reminiscent of how folks in "Star Wars" communicate.

This wonder is achieved with an array of 3D cameras positioned in various places of the room, capturing the person's movements and speech from various viewpoints and projecting them to another room in real time.

For two people to see and interact with each other in 3D, they should both be wearing a Microsoft HoloLens. A wearer can even project a hologram of himself in the room, thanks to the HoloLens tracking system on the camera.

This impressive demonstration comes a year after the Microsoft HoloLens was first seen in action. It is safe to say that exciting progress has been made.

The software giant is expected to release a consumer edition of the Microsoft HoloLens but nothing is set in stone yet. For now though, a developer edition of the headset is available for $3000.