E3: Microsoft's John Schappert

[Laughs] I think it's through continuous innovation. I think it's through continually delivering more entertainment and choices to our consumers on Xbox 360.

When you look at 20 million active members - these are not random people that have signed up one time eight years ago and never been back, these are people that have played on our system in the last eight months, so these are active users playing on Xbox Live - that number eclipses many - most, I should say - satellite and cable companies and their number of subscribers. We have reached critical mass there.

Now, that said, we have to do all that we can to introduce people to it and I hope with partnerships like Last.fm people are saying, 'you know what, I'd like to have music in my living room or my second room, I'll get an Xbox and do that because I can stream Last.fm'. Maybe music will do it, maybe movies and TV shows and the ability to not actually have to go out to instantly watch a movie with our 1080p streaming technology. Maybe it's Facebook and Twitter that does it. Maybe it's because they've been enjoying racing games on other platforms, on last-generation platforms, and they've been waiting for the definitive racing game to come out and it's Forza Motorsport 3.

I think NXE is a great indicator of success with us evolving the platform and bringing more people in, because our membership went from 10 million to 20 million. Movie watch, movie usage if you will, rental and television, is up 60 per cent since we launched the New Xbox Experience as well, and of course how could I not mention Sky? Our partnership with Sky TV is one of the ones I'm most excited about, because for the first time ever you'll be able to watch live television on the Xbox. Test cricket, Premier League football, right on your Xbox just like it's a set-top box.

You know, we're always looking at good partners.

We haven't talked too much about that. Can that be done? Certainly it can be done.

What we did with [Burnout] is that was an early example that the team used to prove out their technology - the software layer and the magic that makes Natal special and unique to Xbox and to Microsoft, and so they wanted a finished game they could work on, so they actually created a pretty amazing little piece of hardware that kind of went from Natal and mimicked an Xbox controller, and so that's what they've got working right there.

It's certainly not the best implementation of how racing could be done on Natal, but it is amazingly accurate, robust and fun, and so that's something that... it's just a great example of seeing a finished piece of software, because everything else we have is still under development, it's still in the tech demo stage. But it's very enjoyable.

We aren't talking about pricing or figures, but I can tell you it's an amazingly complex piece of hardware - it has a depth camera in it, it has an RGB camera in it, it has a multi-array microphone in it, and custom silicon as well, and of course wrapped up with our software library that makes it all come to life.

So what you're seeing there is it's not just one random camera that is stuck there to bring us all this magic - it's all of that working in unison with the software layer that came out of our partnership with Microsoft Research to deliver full-body gestural control and tracking, which is why we say you're not going to be able to experience that anywhere else because no one else has that technology that we have.

So while it's got a lot of hardware and silicon inside of it there, the software layer is also just as magical, but our goal is to have it be as portable and as mass-marketable as we possibly can. So nothing definitive on pricing yet, but that's our goal.

You know, nothing specific to talk about right now. It's still in development as well, so this is something that's for the future. The hardware and software aren't finalised yet.

But, what we wanted to do is we wanted to unveil it because we want designers, creators to start thinking about what they can create with this new technology, and we wanted to get that in the hands of them. So the dev-kits are shipping right now, I think we're going to start seeing amazing things, and you'll hear more about the launch plans as we get closer to the launch window for Natal.

Which we're not also talking about.

[Laughs]

[Laughs] Well, obviously there's various forms of exclusivity. There's exclusive for a window, there's exclusive forever. I think what's important is it's about choice, and it's about having the best games and the best entertainment and the best social experiences.

I think that what's great about Joy Ride is it's an innovative new game and we're going to try a new business model for us, just like we're trying a new business model with 1 vs. 100. We have 20 million members - we have critical mass now, we can see how these things can work, and we've got enough folks that maybe some of these new business models will make sense for us, and bring us a new way of bringing people in.

You talk about capturing the last 10 million members - it's a great way of trying to bring them into the party. Hey, here's a great experience - while you can play it online, it's so much better online and it doesn't even cost you anything, so get your box connected to the internet and get your Xbox Live account signed up. That was a lot of our inspiration behind it and I think we'll get some great learning from it.

You know, I'd like to give that credit to George Peckham [GM of global third-party publishing] and [Xbox Japan boss Takashi] Sensui-san from our Japanese office - they deserve all of the credit in working with Konami and Kojima-san on that. I'm just honoured I was able to be on stage with Kojima-san and as a gamer couldn't be happier that Metal Gear Solid is coming to our platform.