GS: Developers have been very excited about the storage space of Blu-ray. They've also been a little concerned about the speed of the drive itself. I know that it's not possible to rectify drive speed, but has Sony been working with people on ways to maximize the use of the hardware?

PH: I'm sure that there are people out here in our developer support group who can go into more details on this, but one of the key factors to performance on disc is not the drive speed or the data rate, but actually the disc geography: the way you lay out the disc and optimizing the disc. And we have some tools which are allowing developers to maximize that and get high performance.

If you look at the loading times of games on PS1 or PS2 at the very beginning of their life cycle, you can see the way that things improved, not only at the tool level, but also developers themselves became more efficient and more sensitive to the way the data has to be loaded on the disc.

GS: One developer put the data on several parts of the Blu-ray Disc in order to maximize loading. That was pretty crazy, but a good idea.

PH: It's something that we did on DVD as well. It's a perfectly legitimate, logical way of maximizing the use of the drive.

GS: People are smart and will figure out anything.

PH: Right.

GS: Does the temporary backlash that's happening in Europe concern you at all, or do you think it's going to blow over soon?

PH: I'm not sure I know what you're referring to.

GS: I'm referring to people in general feeling like they're paying more for something that's different.

PH: This is a really unfortunate argument that we can never, ever win, but I'll try. The prices that are charged in Europe include VAT. The prices that are charged in the U.S. do not include VAT. Depending on the country you are in in Europe, VAT can be anything up to twenty percent.

On a device which is $599 or $499, VAT is a huge chunk of the price point. The other thing is that the dollar/pound exchange rate at the moment is crazy. It won't necessarily be crazy forever, but it's based on the exchange rate today, which is not favorable to that comparison. Plus there are additional costs of doing business in Europe: multiple languages and some of the distribution challenges. It's something which we don't control. We don't control the VAT rates, much as we'd like to.

GS: I was kind of sad to see that it didn't wind up being as all-region as we had initially heard.

PH: It's region-free for games, but not for movies.

GS: Right. But the backward compatibility is not region-free.

PH: That is true, because of the difference between PAL and NTSC.

GS: But across NTSC systems, that is?

PH: Japan and the U.S. are separate regions on PS2 and PS1 games. It's partly technical but it's partly business policy issue, so it's something we are not entirely in control of because of the fact that PS1 and PS2 games have already been established. PS3 is kind of a line in the sand going forward.

GS: Is Julian Eggebrecht ever going to be able to make a new Turrican? I've heard that he wants to, but I'm not sure anybody at SCEA is really aware of the franchise.

PH: That was one of my favorite games on the Amiga. I'll ask him next time I see him! I don't know that he owns the trademark...

GS: He does!

PH: You have more information than I do! It's a great suggestion. It's a game which I loved on the Amiga and played on the Genesis as well. There was a Genesis version of it, but it was called something else. I can't remember what they called it when they brought it to Genesis.

GS: Mega Turrican.

PH: Thank you. You're obviously a fan!

GS: How significant is the cost of making the PS3 to the system's success for Sony?

PH: The cost as in the component cost?

GS: Yes.

PH: No different to what we experienced on PS1 or PS2, where we initially sell the system and don't make money on it, but as you get economy of scale, the cost comes down, the audience grows, the install base grows, and you get an economically profitable platform. It's a business model we understand very well.