Games development can be a cruel business sometimes. There you are, hard at work on your sequel, shining up the new mechanic that will help you to stand out from the pack. Then suddenly your closest rival reveals that they've got exactly the same feature. And as they're going to be releasing first, you're going to look like a right Mirror Moggy.

Spare a thought, then, for Sumo Digital. The first Sonic and SEGA All-Stars Racing carved itself a space in a genre utterly dominated by Nintendo, and with this previously-unannounced sequel the Sheffield Studio was on track to further differentiate itself. Then Mario Kart 7 showed its hand - a Full House of glider wings and underwater propellers. The Sumo boys must have felt like they'd been hit by a Blue Shell.

So yes, the big gimmick in All-Stars Racing Transformed is that your kart sporadically turns into a boat or plane, depending on the demands of the track. It's not exactly the same as MK7 - your vehicle skims over water, rather than under it, while the air-based sequences are lengthier and allow for 360 degree movement - proper flying, in other words, rather than gliding. All the same, the similarities are going to be hard to shrug off.

The good news is that unfortunate parallels aside, the game itself is looking really quite tight. The pre alpha code at SEGA's first showing was understandably missing a few things - the All-Star Moves, and final graphics for the weapons, among other things - but there was already more than enough there to generate a not-so-friendly sense of competition. In pure racing terms, the big news is that the action is supported by a proper physics system this time, an addition that has a particularly significant impact on the aquatic sequences. Hit the a wave at the right angle and you'll catch enough air to pull off a trick or two via taps of the shoulder button, and you'll be rewarded for your showboating with a quick boost. Naturally you can also get a big push from the old system of drifting around corners for as long as possible, wrestling to stay in control as a ruddy great flame builds up at the back of your kart.

At heart this is still very much a classic kart racer, with power-ups and weapon abuse playing as much of a role as skilful driving. There's a smart balance here, offering up a good helping of beloved genre staples with a smattering of new ideas. Two tracks were on display in London - one based upon Panzer Dragoon, another on Monkey Ball.

Both courses offered alternate routes for the canny driver, usually providing a quicker-but-riskier route, but the real game-changer is the fact that the courses change quite dramatically from lap to lap. There's a chunk of the Dragoon track that gets destroyed after your first circuit, for example, forcing everyone to descend into the waters below, and then up into the skies for the final go-around. Meanwhile the Monkey Ball race takes the form of a linear, downhill watercourse, with a magic portal at the bottom that teleports you back to the start for each fresh lap. For some reason this ends up feeling like a cross between WipEout and a water flume from one of those 80s swimming pools, with the added fun of a giant, evil-looking whirlpool at the finale.

Naturally enough, part of the appeal of (take a deep breath) Sonic & SEGA All-Stars Racing Transformed still lies with its nostalgia drenched cast. Much of the 25-character line-up has yet to be revealed, but it seems that most if not all of the first game's drivers will make a comeback. Heading up the newcomers are Vyse from Skies of Arcadia and Gilius Thunderhead from Golden Axe - the latter riding a giant turtle like the bearded badass he so clearly is. Touches like these are bound to go down a treat with dyed-in-the-wool SEGA fans, and while there can be little doubt that the Mario Kart 7 comparisons will be an annoyance for Sumo Digital, there's every chance that the game's intended audience won't mind one jot.

Sonic & SEGA All-Stars Racing Transformed will be released in late 2012 on PS3 and Xbox 360.

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