Can you explain a little about MSN Games? It’s a paid service, right?

MSN Games is a web based PC service where you can play web games for free and you can download and pay for some of the games as well, like on Xbox Live Arcade but they’re try-before-you-buy games. The thing I would say is that most of those games are unconnected, so you can buy them and play them and some of them are great fun, but for me they don’t have that same depth behind them. You can’t tell what your friends are doing, and there’s no level of comparison. But that’s why we’re so excited about bringing the Live service to Windows as well, so then they can see the mix of both worlds.

So what kind of success are you hoping for with the service?

Well, today we have 13 million people who play on MSN Games every month. I’d love to see them all play on Live. I think that would be a great boost for the player base on Live, and I think it would be a great thing for those players as well.

You can see the difference when you begin to add a little bit of connectivity. I mean, on the PC we have Games for Messenger as well, and there’s less games on that service than there is on the MSN Games site, but there’s twice the number of players who play every month on Messenger Games.

So you can see that as you add the community fixtures in there, it becomes a much more interesting mix. Even if you never play against somebody else, being able to play and know that your friends are there and being able to look and see how they are versus how you are and compete and cooperate, it brings so much more to the games service overall.

But you’re obviously going to face challenges in actually getting these people to subscribe to the service.

Well, yeah. From a subscription standpoint, there is that financial burden. But just like with Xbox 360, the Silver members can download and play Arcade games, and I would hope it would be just the same.

What kinds of areas do you see as needing improvement with Xbox Live Arcade at the moment?

One of the things I think we need to work on is our method of game discovery. When we had nearly 20 titles at launch, it was fine to have an alphabetic list and two genre categories, but as we get to 60, and if you think ahead over the next year, as we add titles there, pretty soon it’s going to be difficult to find games. That’s why we added the new releases category. It’s one step that means you can look at what’s come out recently, rather than having to go through each genre separately to find out what you don’t have.

We will be making improvements in that over the coming year, and making sure you can find games that are interesting to you as easily as possible.

Are there things within the PlayStation Network and the Wii’s Virtual Console that have alerted you to gaps within the service?

Well, I know that we do our best to keep track of what’s going on, though I think we’re operating on a slightly different road-map – we know where we’re heading with the Live service, and we have a vision for what we’re delivering to customers and so far we’re staying pretty true to that. I think in some areas, we’re actually seeing reinforcement from some of what’s happening on the other services.

So you don’t believe that they’re heading along a road-map in the same way that you are?

I don’t think we’re on the same road-map, no. I think every service will be slightly different, and that’s the beauty of competition. Over time I hope they do discover things that are great that we can appropriate as well. I’m a huge believer in having multiple services out there and having a real competition exists, because I don’t think there’s any way one company can innovate in every area.

Every stage of this – I don’t care if it’s technology or whatever – it will be good for the consumer. And it’ll be good for Xbox Live Arcade as well. Keeps us on our toes; keeps us moving ahead. So far I think we’re delivering on a great vision for Xbox Live Arcade.

What kind of threat do you see coming from those services, in terms of the market share that you have?

I don’t know that I view them that way because at level there’s a prerequisite: you have to have a PS3 to buy something from their network. That’s the bigger challenge. It’s not about whether they have a better version of Live Arcade – they need the boxes in people’s hands.

At the end of the day, though, it’s kind of going to be the developers that determine that as well. Even if there were tons of boxes out there, it’s going to come back to: what’s the content mix like? Is there a variety? Is it good gameplay? Is it something that meets what you’re used to today?

But with the Wii moving into original content, as they have hinted at a number of times now, that’s obviously going to be more of an issue.

I think that’s going to be great to see. I really do. There’ll be people that develop on other platforms that are good enough to make it to Xbox Live Arcade as well.

Finally, what do you see as the future of Xbox Live Arcade?

I think we’re going to continue to grow. We’re going to continue to release great games. there’s going to be new innovations on the platform over the next year that will make it easier and easier to interact with the service, and I think you’ll see more community features as well, with things like Live Arcade Challenge, where you can play in tournaments and so forth. And when you mix that with a great lineup of titles, I think we’re on the right track.