Next-Gen: One of the things that Kaz Hirai said during his keynote is that the PlayStation business needs to “get back to basics.” Is he implying that Sony Computer Entertainment has lost its way a bit compared to past console generations?

Phil Harrison: Yeah, I think it’s a fair observation. Our business is bigger, it’s more complex, we have more platforms, you know, there’s more stuff—networks, games, movies, music. There are so many opportunities for distraction that it’s really easy to make an assumption that the core business that you’re in, videogames, is being well-served.

Now the PS3 price cut. It happened recently and [PS3 sales] still didn’t, in the US, pass the Xbox 360 in monthly NPD sales. If a $100 price cut hasn’t done it yet for PlayStation 3, what is the next step?

Well we had a great up-tick in sales as a result of that price cut, and these price moves are fairly predictable. Taking your starting and ending price point, you know largely what your increase in sales is going to be. What price moves often surprise us in, actually, is how long the message takes to get through to the consumer. You can change the price at a retailer pretty quickly, but [the sales increase happens] when [consumers] start seeing that price repeatedly advertised to them in the supplements that come out in the newspaper or in the print ads in the local paper or when they actually go to the store itself. So it can actually take weeks or months for the price message to really get into the psyche of the general consumer, obviously not the specialist gamer, but the more general mass market.

The second thing is that price alone is not enough to drive demand for the system. It has to be coupled with software and with demand for, in PlayStation 3’s case, the other functions, like Blu-ray movies, network, et cetera. All of those are building up. This holiday season, we’re going to see a really tremendous lineup of software from us and from third parties and also the increasing importance of Blu-ray disc as a movie format. So I think that it will come into its own over the next few weeks or months.