KG: Again, back to the retrofitted Burnout Paradise, it's kind of interesting... Will third parties be able to like deliver an update through the system and, you know, make it compatible?

SK: All those details will come out, but, you know, our goal again is to make this compatible with existing 360s. Hopefully, publishers are going to look at it and decide do they want to do that, right? And enhance their core games. Or they'll use it for games going forward.

But it's a great example of just how simple it is to adapt. You know, it's not like we went into the source code. But you can adapt an existing game and make it work. It's pretty neat.

BS: It looks like you've pretty much got the first free-to-play pay-for items, microtransaction-oriented title [Joy Ride] on consoles. Obviously, this is sort of a feeling out, testing out the waters. Do you foresee more of that in the future? And will it be possible for third parties as well at this point?

SK: Sure. Sure. I sure hope so, in the same way that 1 vs 100 is completely ad-supported, right? You know, we want to create and expand the business model on Xbox 360 and Xbox Live, and having a service like Xbox Live enables us to do that.

Whether you're talking about MMOs, you're talking about downloadable episodes like Grand Theft Auto, or songs, or now items for Joy Ride or 1 vs 100, which is advertiser-supported, that's a really cool thing and the great thing about having a service like Live because it does enable us to differentiate and also diversify the business model for us and for our partners.

BS: It also could potentially allow some of the more traditionally PC-oriented companies to get into that market.

SK: Sure.

BS: For example, Nexon, Free Realms, and that kind of stuff.

SK: You know, that model obviously exists. It's not like we're inventing the model, so it's pretty prevalent in the PC world, especially in Asia. And so it would be great if those folks thought that Xbox 360 and Xbox Live was a great platform them to reach a new audience.

KG: Why would they want to do that, though -- go from using an open platform like the PC...

SK: Well, it depends, we've got access to the television here. You can have a great social experience with the television. All the things that we offer with 360 and Live. It's up to them to decide if that is worth the economic trade-off because you're right; it's not a completely open system, and it's a different development platform than the PC.

But again, people didn't think that some of these other genres were going to come over to the console, and I see no reason why -- because it's a great way to tap into most consumers, particularly because we don't necessarily have to make it one or the other, right? Anything we do on Xbox Live could be integrated with their existing MMO world stuff they've already created.

BS: Do you think that it could be possibly a way to break into the Asian markets a bit more, is that not necessarily your plan?

SK: I don't think it's just about the content there. I mean, there's a lot of different challenges and requirements in some of the Asian markets, right? I mean, China and Korea are very dominantly PC game markets.

You know, it's relatively simple to say we're going to export our hardware into a market, but the fact of the matter is you need the entire program. You have Live there, and you have to have content there.

Now, if I'm a Chinese game developer, sort of like what we were just talking about with the MMO guys, why am I going to spend the resources to develop my game now on a console that doesn't have an install base like the PC install base, particularly with internet cafes and blah blah blah? How do I sell an expensive piece of hardware in these markets? That's a very different kind of proposition.