Sony's John Koller

In the US and North America we haven't made a firm decision on if and when we're going to launch day and date. Other territories have already decided that – Japan does it now and I believe Europe is going there if they haven't already. But we're looking at the opportunity. I think for us digital fits our view of the world in the mid-term, not in the short term – three to five years out. So we want to start providing the content for the consumer and getting them to the place where they can accept digital distribution.

If you look back to what happened with music, it really hung on to the disc for as long as possible, when consumers were actively saying "we're very interested in digital". We want to provide the content and at least allow the consumers to make that choice. We're going to be fairly democratic and open and if consumers want digital they can wake up and download it, if they want UMD they can go to retail for it. We want to provide that content opportunity. We're looking at various models to see when to launch those. That's not to say retail is going away, because it's not, so it's a balance. It's a very fine balance because retail does so much for us that digital maybe can't. So it's a nice compliment. Different models are floating around and it's not decided quite yet.

We don't, but what we do have is a plan to ensure that every, or most, games launched will have digital integration. That's something we've been pushing very hard for and we've been discussing that for the past year and a half with publishers. Certainly, we'll be doing that on the first-party side. If games are going to launch the same day, that still needs to be decided, but they'll be very close because we've got to provide the content for the consumer on the digital side.

That's a very relevant question. Retail for the first two year's of the PlayStation Network thought that it was the enemy. But now they've really come around and now they want to participate. They've been very open and they want to know how to become part of the PlayStation Network, to get margin out of it and be able to help sell some of our products. The first step has been the PSN cards, which are basically debit cards, and interestingly enough most of them are being purchased in cash. So it speaks about who is purchasing them in many ways – someone without a credit card, or who can't access the PlayStation Network. Certainly in the case of the PSP, where the lion's share of business is done with the 13 – 17 year-old consumer and they may not have a credit card. The PSN part of that is really important for retail. Retail sees that we have a portfolio of PSP content so they want the right purchasing dynamic. But they're also looking at various ways to help actively sell products, and there's a lot of different ways and iterations of looking at the business models of that.

Very, very positive. They're glad we're here. Many people assume it's because publishers don't want to incur packaging and physical distribution costs. That's true of course, but publishers will also say "it fits our view of the world too". Consumers are going there, so let's make sure we have the content. It's not a difficult transition. If you're a developer it's not difficult to make a game that's already going to be on UMD for digital as well. We convert is at PlayStation Network and the developer has to do very little.

In many ways it shortens the distribution channel because we become the distribution channel. But it also provides ease of use. Particularly with the PSP. A 15 year-old wants to wake up in the morning and download a game to play on the bus to school. You can do that very quickly when GameStop isn't open.

We still look to actively support UMD. Again, it's a balance, because we want to make sure that retail has theirs, and on that we on the digital side support this new kind of distribution model. We look to the tangible disc as continuing to be very important. I think there's certainly a consumer out there who values tangibility. We say that alot in our research. Consumers who just want to hold the disc and be able to use it.

On the other side, and again going back to music, we've seen that model and we know how that ended. We know that after a couple of years of digital most people said digital was for them because it's so easy, they're not going to lose the license to something they download. The consumer who likes tangibility is worried about system crashes and losing downloads. So that's an education process for us to talk to consumers and let them know that content can be re-downloaded. It's a balance, but UMD isn't going away.

It was actually more of a reaction to looking at our software line-up and seeing that the consumer wanted more. We wanted to go to developers and tell them what the consumer wanted, because consumers have been telling us that it's a system they love. 80 per cent use it at least twice a week so it's not something that just gathers dust and sits on a shelf.

But they haven't demanded as much new IP, they have demanded larger franchise games that are unique for PSP, and they don't want ports. And they want to be able to find these games because of a lack of marketing behind many of the PSP titles. If you can't find games on the shelf, and consumers don't know they exists, it's hard for them to sell.

We went to developers and said; "Large franchises, keep it unique and please market the game". The size of the game doesn't matter so much. We always use God of War as an example because consumers were surprised it was eight hours long, and not the 20 hours they experienced on PS2, but the reality is you're using the PSP for 15 minutes and then putting it down. You're not playing for hours on end like you are on a console. We wanted to make sure that message got across. So it was less a reaction to DSi and iPhone as it was to us looking at our line-ups and saying "we need to do a better job here". the fruits of the labour is pouring out this year, and we've been talking about it a lot, but we've only mentioned about the first half of the line-up. There's another half to maybe three quarters that we're going to be announcing in the months leading up to E3. There's a lot of big franchises to come.

There's a lot of software coming. We're really focused on software, and I don't think that's a big surprise given that it's going to be the best software year the PSP has ever had, there's no doubt. You can think of some of the major franchises on console that would come over to PSP and people are going to be very excited. In much the same way they have been when they saw the Rock Band and LittleBigPlanet announcements. On another note, we're doing a better job of discussing what the PSP does. From a marketing perspective we're talking about the fact it can do movies and connect to the PS3, those types of things. To ensure the consumer understand what it can do.

I do get asked this question a lot, and it's understandable. The centre point of the PlayStation brand from a hardware perspective is innovation. When we went from the PSP 1000 to the 2000 we shrunk the model and made it more portable. The 2000 – 3000 was more about the screen, because we felt that we could add the best resolution of any portable entertainment product. Following that logic we're constantly looking at what the consumer's asking us. We have no plans for a PSP 4000 right now. But I will say that we are looking at firmware updates and software changes that are made to the system to be able to update and add new features and functionalities. And those are fairly regular, those come every six to eight weeks, and there's some exciting things on the horizon in terms of features added this year.

Last year was the best sales year for PSP, and that was with a limited software line-up. How high is high when we have a much better software line-up for this year? We are very bullish on it