Activision's Mike Griffith

We're getting great feedback. DJ Hero was really getting traffic on the floor. We're getting a lot of broad interest, but DJ Hero is stealing the show. There's tremendous energy behind DJ Hero, people are responding to the innovation, it's new and different and satisfies a new type of consumers and a new audience.

We're certainly making a lot more hardware than we were in the past but it's a really a reflection of this cycle and the ability to have physical interface and the consumer's acceptance of that interface. Our objective is always really about the game and how to make that great and innovative.

We're not trying to get into the peripheral business, we're trying to make innovative gaming experiences for the consumer. With Tony Hawk that led is to a peripheral. We took a page out of the Guitar Hero book were it helps you feel like a rock star even though you can't play guitar. With Tony Hawk it's the same concept – you can feel what Tony Hawk feels even though in real life you can't come close. Make the right movements on the board and you live vicariously through the experience.

It started slow and organically and it felt more like an evolution. In the early days we had a lot of difficulty manufacturing enough guitars and a lot of difficulty with our logistics systems. In the early days of Guitar Hero we added capability and built a lot more support with people on the ground in Asia and logistics in Europe and North America and now we're pretty good of it.

We're as much focused on giving the consumer a great experience as we are giving the share holder a return on their investment. We don't really break our goals out item by item but I can tell you our objectives of delivering a return apply across the board.

They're going to be a big part for the rest of this cycle. The consumer has seen the advances in this technology, and seen peripherals take advantage of technology to deliver a more physical interface. The consumers has been very accepting of that and it's bought new consumers into gaming. Having said that, I don't think peripherals are taking over the gaming market. There are games like Modern Warfare 2 that don't require a peripheral and perhaps a peripheral would get in the way.

We haven't and I think the consumer is saying if the value is there in terms of the entertainment experience then the price is fair. If you also look at in the economic downturn, traditionally stay-at-home entertainment vehicles have done better. Part of that is recognising the value that a videogame delivers. If you look at the extended life of a game, take the purchase price and divide it by the hours played, videogames become a very attractive prospect. While consumers aren't calculating the hard numbers, intuitively they understand that you can buy a videogame for about the same price as taking four people to a movie and it'll keep those same four people entertained for longer.

It's certainly hitting a more mainstream and expanded audience from Guitar Hero. I think it will build on what Guitar Hero has been able to do. If you look at what our Guitar Hero franchise has achieved, we now have 15 million households that are active Guitar Hero users and we continue to satisfy them with more experiences and the chance to indulge in more music and gameplay.

But outside of those 15 million household's, there's another 300 million that haven't for one reason or another bought Guitar Hero yet. One of those reasons is we're not reaching new genres and new music audiences in a way that DJ Hero allows us to accomplish. DJ Hero is going to be expansive to the franchise and be particularly exciting for Europe where that genre of music is arguably more important than it is elsewhere.

It's too early to say what future versions will be but we already have the support of Jay-Z and Eminem in this release and they are very actively engaged with it. We have a special SKU which will come with two discs.

In particular if you look at the Guitar Hero franchise we are significantly under-developed relative to the share of the rest of our company in Europe. Some of that was driven by early decisions to allocate scarce hardware to North America instead of Europe, which we've now made up for. Some of it is due to not enough localised content to really satisfy consumers particularly in parts of Europe like Germany, France and the UK. We've done more of that and if you look at the March quarter consumer sales of Guitar Hero in Europe almost doubled. We're starting to hit a inflection point and things like Guitar Hero: Metallica, which will coincide with the band's multi-city tour this summer, DJ Hero that addresses that techno, hiphop and club genre, should help us accelerate that.

We have been acquisitive on studios over time. Our model has typically been to work with a studio, develop a relationship with them and then if there's something that's mutually beneficial we'll pursue it. That's been our history, but we're driven more by working with top developers wherever they are more than trying to target by geography. We're looking mostly at how do we establish deeper relationships with the most talented studios in the business no matter where they are in the world.

Those are logical directions for Sony and Microsoft and obviously they're seeing what everyone else is seeing – that the consumer has responded well to the physical interface of the Wii. This has been their response and I think they are expecting it to expand their audience which will be good for the industry by bringing in additional gamers. We're always very supportive of their initiatives, we've got close relationships with all the first parties and if the consumer is receptive we'll be supporting them.

No. We've known about that and looked at that technology ourselves and concluded that the precise movement detection that's in our skateboard, the infra-red sensors that detect hand grabs for example, are all very important to recreating a genuine skateboarding experience. The board that we have is going to deliver the best experience. In the future we're open to examining all different input devices. Guitar Hero is a peripheral already across all platforms, Tony Hawk: Ride will be across all platforms. For a our near-term peripherals business it doesn't really change anything because we're already across all platforms.