Microsoft's John Schappert

We've had ads on the Xbox 360 for a couple of years. I think our ads are a plus for the service in many ways, because they're tailored to our users. The clickthrough on our ads is very high because the advertisers advertise great products that our digital consumers like. We're pretty particular with who we let advertise on Xbox Live as well.

So yes, there are ads, there will be ads. We have nothing to announce with respect to subscriptions.

Ah-ha... We have nothing to announce about that right now. I will say however we have great customisation on the avatars, and when we launch, that's not the last lot of clothes and so on we'll release. There will be frequent releases - for free - of new content.

The economy is something that affects all of us, and it's something I hope stabilises. That said, we've seen strong demand for Xbox 360, and I think our price point is a great price point.

If people are looking for a console this Christmas, that price is something they will be looking at. It's going to be a hard Christmas, as you said; we've got a great price point, though.

I probably can't go on a little rant. Can I go on a little rant?

The innovation criticism is almost ironic to me. You've got the Xbox, which is the console that pioneered hard drives, broadband gaming, online gaming, Achievements and gamercards. It's the console that arguably pioneered first-person shooters in your living room, wireless controllers... I could go on.

I think we've earned our chops in terms of innovation. The games division has some brilliant people who have done amazing things, and who have shaped the industry forever. I think we've done a great job of innovating and we continue to lead.

With respect to Avatars - Miis are wonderful. Nintendo has done great things. But avatars are just a logical extension of what we've had already. We've had a gamercard and a gamer pic; I want to take that to the next level. Now we've got Live parties, we launched the first video store... So I get a little riled there. I think we've done some great things for the industry and for gamers.

I might also add that gamers recognise it. We've done pretty well and we're really happy with our success so far, and proud about what we're launching next.