Well I think they could dynamically go from single screen to split screen; it might get a bit confusing when someone at the border flips back and forth but they could reduce the 'flickering' by change the point of view when single screen vs split screen.
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Also the game should be more amendable for the steam controller than an xbox controller; though it might be possible with an xbox controller. Hum. It would be a fun project to explore the interface and behavior but at the end of the day i'm not sure how well it would really work (after all I can't stand an xbox controller when compared to keyboard/mouse so my view might be bias).