Microsoft patented two styles of video headsets in 2010: an aviation-styled Gaming Helmet for Xbox gamers, and a pair of sunglasses for smartphone and mobile device users.
Patentbolt unearthed the patents, which were filed in Q3 2010 and published by the USPTO early this year.
The images produced by Microsoft's eye-wear would be 16:9 and "appear to the wearer as if it were 21 inches in diagonal and viewed at arm's length".
Each eye of the video headset could be configured to produce a stereoscopic 3D image. The viewing area may also be slightly transparent to allow augmented reality projection on to surrounding objects, like toilets.
Note that the pictures accompanying the patent are illustrations of ideas and not prototypes.
The central part to this patent is Microsoft's "virtual-image projector", which uses "a laser configured to form a narrow beam, first and second dilation optics, first and second redirection optics, and a controller". Not a controller as in a game pad.
The rest is a bit complicated.