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In an interview with CVG, Fergal Gara continually discusses the PS3 business strategy in the context of how it will look at retail, which perhaps is the most crucial element of any consumer product.

With the new 'super slim' PS3 now on sale, Gara has much to discuss about RRP strategy, bundle offers and why Sony is facing a dream opportunity this holiday period.

What's your general message for CVG readers who don't have a PS3 yet and are considering the new PS3 model?

GARA: The message is that we have two machines for two types of consumer. Both are connected to different sets of needs. Whilst it is good to refresh your models, I think there are a few key advantages with the new design, such as the lighter weight, lower power consumption, and clearly with the pro model, much bigger storage. So we're trying to be flexible as well as give the system a fresh look.

Just a point of clarification - can customers upgrade the 12GB model with their own hard drive?

Yes, and we haven't made these consoles difficult to upgrade. If you want to take a drive from an older PS3, and carry all your data over, then the basic model would make more sense. With the 12GB model, which is targeted for families, we still want to give people the option to upgrade.

It's interesting that Sony has a system custom designed for the casual market - one that seems certain will be packaged with Wonderbook. How important is that family segment for the PS3 business?

It's hugely important and the timing of Wonderbook is tremendous. If you look at the casual market overall in the last few years, there's no doubt that the kings of that market has been Nintendo, they have done a great job with a great product. If you look back even further, I think Sony has done a great job with the PS2 in the casual market with games like Singstar.

If you look at the upcoming Christmas market, the Wii will be selling in very low volumes - it's on its way out - and the Wii U will arrive, but it will bring in a relatively small number of early adopter consumers. We see ourselves well positioned for the casual market who won't buy Wii U on day one.

We've got a wow moment, we feel. I remember when people picked up the Wii controller for the first time, that was a big moment, it was a casual market breakthrough, but we thing we've got a casual market breakthrough as well with Wonderbook and the lowest priced PS3 yet.

It does present a marketing issue in terms of how much you can spend, because you get a sense that Sony will push hard on PS Vita this Christmas, but will there be enough left to publicise the PS3?

Well, clearly we're going to push hard with Vita, and with the PS3 our cornerstone product will be Book of Spells. We've also aligned with Skylanders, by the way, as well as Epic Mickey, so there will be a broad church of products available.

Obviously we don't want to forget about gamers, and while we don't have that big triple-A game this Christmas, we have a stronger alignment with Assassin's Creed and FIFA. There will obviously be more to come. But in terms of marketing, we're not lacking in budgets and we have two healthy budgets for both the Vita and PS3. We will spend.

With regards to the core market, is there a disappointment that there's a big triple-A Sony game lacking from the equation this Christmas?

It would be wonderful to have one. I take huge confidence in what is coming down the line though. Of course we'd love to have a new triple-A game, but we have a great strategy for this holiday period.

We don't have to talk to the same audience all the time. We have a stronger play on family this Christmas, and for the core games we will leverage third parties a bit more. I'm convinced we've got some great games coming out next year, such as The Last of Us and Beyond.

With regards to price, some CVG readers are surprised that the new console models don't carry as significant a price cut as they expected. Do you understand their frustrations?

I do understand, and we try our best to lower prices whenever we can. Y'know, PS3 is now well under half the price of the first model, and comes with a lot more storage too. The online service has come a long way too.

But with regards to price, it's retail that sets it, and there have been assumptions about it, but we have good budgets to support retail with good deals over Christmas. So I think there is scope for retailers to offer favourable pricing at their discretion.

There's a new Wii U at a higher than expected price point, and the Xbox 360 sits around the £150 mark, so there was a suspicion that Sony would undercut all this Christmas.

Well we'd always love to be the cheapest, but the PS3 packs in a lot of features and represents great value for what it is.

Sony has already told investors that the PlayStation business will turn profit this year, and the new PS3 model appears to be cheaper to manufacture, so was there a constraint on the RRP due to the fact it needs larger profit margins per sale?

Honestly, I don't know if the new PS3 is cheaper to manufacture.

It's very likely that it is cheaper to manufacture. Certain electronic components, such as the disc drive, have been removed entirely.

I don't know where it nets out. But you're right that PlayStation needs to be profitable, and it needs to be a pillar business for Sony. We're obviously very proud that PlayStation is such a key part of the Sony business, we have the money to invest and deliver really great business. We recently purchased Gaikai for a significant sum, for example.

The decisions on pricing are made on a global basis, and they incorporate a number of complex issues such as currency rates. We don't have influence on some of those decisions upstream.

So people shouldn't expect an official price drop any time soon. It's understood that retail has space to lower the price, but an official price drop is not imminent?

Well the 12GB version has a meaningfully lower price point than the Slim version, and the 500GB model is around the same price. What retailers have is complete freedom, and Sony has significant funds to help achieve attractive deals at retail this Christmas.

With regards to the Wii U, how big a competitor will it be this Christmas? Are both your markets the same?

I don't think it'll be the same market, and I think it's going to be interesting to see what market will pick it up. I have no doubt that people will be interested in the Wii U at launch. What the medium-term looks like, I don't think we know enough about what consumers will think.

If you look at the spread of the software, I think it gives a very broad message, from Nintendo's own products to core current-gen games. But will Call of Duty fans want to play Call of Duty on the Wii U? I've no idea. It feels like a stretch from the market they've been in. So clearly Nintendo is going for a broad proposition.

The message from Nintendo is 'wider and deeper'.

Yeah.

But I wonder whether that strategy lacks focus.

Yeah exactly. I've yet to meet someone who has picked out the killer experience. But it's the market that will decide so we'll watch it with interest. I don't believe there's a huge volume of Wii U systems set aside this Christmas for the UK, so the impact will be capped at the volume that's available.

Even we find it hard to judge the potential of the Wii U. Clearly people like getting their hands on it, but I just don't have much info on how many people want to buy it in the medium-term.

PlayStation is clearly trying to merge Vita and PS3 with regards to cross-play, cross-buying and PlayStation Plus. Would the company consider a console and handheld bundle at retail?

Absolutely. We'd have nothing against that whatsoever. And it's not out of the question that we would do that this Christmas if we wanted to. We put together packages for retail, and there's no reason why we shouldn't create a 'Vita plus PS3' bundle, which could feature games that use cross-play, as well as include a PlayStation Plus subscription that both devices could use.

There is really a story there of the two consoles building a partnership. 'Better together', as I say. If we want to continue to promote the partnership between PS3 and Vita, we have to look at ways in which we can show that. Is a dual-console bundle box a perfect solution to that? I'm not sure, I think there's scope to have deals where people buy both the Vita and PS3, along with cross-play games and get a discount, that's a possibility right now.

If this idea of dual-screen gaming takes off, which is what Nintendo wants, clearly Sony has capacity to instantly compete in that market.

We do, and there's a lot of flexibility for that.

There's a perception that next year there will be new consoles and the current gen will fade out, but more recently there's a sense that PlayStation 3 will actually carry on for longer than people expect.

We're nowhere close to giving up on PS3. When you look at the UK market, it's easy to say that current consoles are fading. But if you look at PS3, it's holding up a lot better than others, so it warrants support.

But if you look at continental Europe, PS3 hasn't even peaked yet. Why would you run away from a console business when you're not even top of the hill? We're certainly not going to run away from it.

Completely understand, but the conflict of interests is the fact that - if you're too late on next gen consoles, you'll lose your head-start, and history has shown that the head-start in the next-gen race is crucial.

We do have a challenge to manage that, particularly in terms of dev studio resources. The more platforms you have, and the amount of rich content you have to deliver on all the systems you are supporting, clearly puts pressure on decisions made across the studio network, which is something we are battling with.