Mind Candy's Michael Acton Smith

I'll be honest - I think the future is online gaming. It's gaming as a service rather than out of a box. And, although it's a very painful transition for a lot of the big gaming companies, I don't think there's any way that you can stop it. This is how most of our kid and teenage and older audiences want to consume entertainment content, so I think that the consoles and traditional gaming companies are going to find it tough going forward unless they rethink their business models and put online right at the forefront of their strategy. And, of course, many are trying. But it's a bit of a tricky transition period.

Yes, Hi5 is putting gaming right at the centre of what they're doing - as MySpace is trying, as Facebook has realised as well it's where all the money comes from. 43 per cent of the apps being tested on the iPad at the moment are gaming apps. 3 per cent are books. Gaming is just so pervasive and working on every single platform, it's so powerful, and the online component - when you can play games and connect with your friends, talk to them - is the core attribution.

Possibly. I think it's all driven by the consumer and the consumers are looking like they're increasingly unhappy paying hundreds of pounds for a console and £30-£50 for the games when they can get much cheaper, simpler gaming experiences online and connect with their friends. Graphics may not be as amazing, the experiences - gaming-wise - might not be as high-fidelity, but they can have more fun - and ultimately that's the most important thing, that's what people will pay for.

Absolutely. So we're chatting to companies at the moment about a DS game - we think that will make most sense for us and our specific audience. I think though that the core will always remain browser based, flash gaming. It's very simple - there's no download, it's very simple to get into the game, flash is advancing, broadband is spreading far and wide.

We have looked at the mobile side of things a little bit. It is very exciting and we are working on an iPhone and iPad game. The economics I think aren't quite there favourably for the developers at the moment - it's hard to make massive hits. If you look at Zynga doing hundreds of millions of dollars a year, Playfish and Playdom aren't far off. You don't see that on the iPhone platform.

So I think that while there are developers, and will be developers, that have medium-sized hits, it's much harder. So we're waiting to see how big a bet we're going to place in that area. And because our core audience is kids, obviously they're not so tech savvy and they don't have that many mobile devices.

Are we seeing a bubble in social gaming? Absolutely not. If you look at the Far East and how big the virtual goods market is - $5 billion plus, seven public online gaming companies, the smallest of which has a market value of $800m, the biggest is multi-billion. Why on earth are you not seeing that in the West? We're seeing huge amounts of growth and we're still in the very early days.

The reason Club Penguin and Playfish went for such multiples is because they are profitable businesses generating substantial revenue. I was involved in the first dot.com boom back in the 1990s and companies were valued at crazy amounts on multiples of users. This time it's multiples of revenue and that is not bubble - that is solid hard fact. So I think we've got a long way to go.

Absolutely. I think there's no holding it back. Whether it be as a distribution channel, buying games through Steam, or whether it be playing games through the browser, and games on social networks - absolutely it's where the future is. Spending years and tens of million of dollars printing a game, having it in a box and physically shipping it to a store - I don't think that model can last.