In this era of PS3 and Xbox 360 games, where third-parties are almost never shipping console exclusives, certainly Sony's been very strong on, well, "our strategy, then, for differentiation is to use our first-party organization to make solid, important, AAA exclusives." Is that how you see it, too?

PS: Absolutely. And to ship them! That's an important part of our strategy. Look at Forza shipping next month: the definitive racing sim this generation. You could say it's the only racing sim that's shipping this generation.

We understand that the experiences we bring to market are most likely the only platform-exclusive experiences that we bring, and that's why it's important that our quality remains so high. If you look at the last three or four years, our review score average rivals anybody out there, first-party or third-party. We continue to bring a great mix of new IP as well as existing franchises and broaden out as a platform into things like movies and social networks and other kinds of entertainment to continue to evolve with our customers as they start to entertain themselves in different ways as well.

Netflix was a big win for us. Was that a first-party game? Well, it's a first-party implementation when you think about it: something that was platform-exclusive, something that millions of people adopted, and something that I think really mattered for the 360 customers. They saw this as definitely a value-add. Twitter and Facebook when it comes this fall; 1080p cinema-quality streaming movies -- these are all additions to what is capable on the platform that continue to change the face and the offerings that customers have.

So are things like Netflix, Twitter, and Facebook under your purview?

PS: Some of the stuff is a mix. Say, like avatars; avatars were created at Rare, and they continue to maintain and evolve the platform there. The work specifically on Netflix and Sky was done in the Live organization. But the link between Marc Whitten, the gentleman that runs live, and what we do in first-part content is really strong; we sit together on a weekly basis, go over the different content that we're building, and make sure that the partnership is there.

To go back to what you were talking about with microtransactions, you're doing your first experiment with those; is that to see how it works with your audience, or is actually expected to become a revenue stream for you either on that title, or moving forward?

PS: Well, to be honest about it, our first introduction maybe was the avatar marketplace that shipped just not too long ago. With the amount of marketplace content I see in my friends list via their avatars, it seems like a lot of people are choosing to customize their avatar in interesting ways.

Is it going to be an interesting part of our revenue streams going forward? If it makes sense to the customers, it will be; if it doesn't, it won't be. So we need to build the right game where a customer feels like they get the right value, they're having fun, and it's an additive part of the experience.

1 vs 100 is something that we did. It's not microtransaction, but it's a free-to-play game that's clearly ad-sponsored; if you play the game, you see that where we're giving away prizes. We've had great adoption there. But it will be an interesting part of our overall revenue stream if we get the games right, and if we don't then nobody will use it.

Do you think it could be something that you'll want to enable for third parties? I don't know if you can speak to that. There was some discussion that Nexon had about whether it might port Mabinogi to the Xbox 360. That's a free game with microtransaction support. It's definitely becoming prevalent on the PC side, and it's becoming a really important business model.

PS: Yeah, I think it's great to see the innovation with FarmVille and other things happening in the Windows space; I think there is learning for us on console there. But as well, we have Games for Windows Live, and we are probably more focused on that marketplace in Windows right now -- maybe not as publicly yet, but internally we look at the size and the types of the communities that are getting created in these different Windows social environments that we think map very well to what we're about and the experiences that we've had on console. It's something that I'll just say we're very active in internally, thinking about the right experiences that make sense on both platforms.

And you're right; there's a new set of publishers out there and a new set of content that customers are really gravitating towards. The numbers that Mafia Wars and some of these other games grab are really outstanding; great success for those teams.

There are entirely new customers that could be enabled, potentially.

PS: Yeah, and when you see the research it's not always a new customer; sometimes it's a dual customer. What I like to see, though, is the timed engagement that those games offer, the nature of the social and community that really gets created, and the business models and watching the innovation there. That's why we do things like 1 vs 100 and Joyride and other work; we want to continue to evolve in that space as well.

Everything's not about a $60 retail transaction; XBLA shows that. Summer of Arcade was hugely successful at different pricepoints; you had Shadow Complex, you had Splosion Man, you had Trials HD -- those are my first-party games, really did really well. Entertainment across multiple prices is important.