TechRadar: This idea of 'casual' versus 'hardcore' gamers, which we talk about a lot in the games industry… Do you think they are useful labels any more?

Stephen McGill: Well I think they are very interesting labels that are very easily banded around. I mean, there is definitely an audience who love their games and love and buy a wide variety of games. But it would be a mistake to miss the fact that they don't also enjoy what people might label 'casual' games, stuff like You're In The Movies or Lips.

I think a lot of it comes down to the situation that you are in, you know, whether or not you or married, have kids, have a girlfriend. What do you want to do this evening? Depends on who you are with and what sort of mood you are in, really. You might bring out Gears or you might bring out You're In The Movies.

There are some people who are genuinely only interested in snack-sized games. And, equally, there are those people who are only interested in playing Pro Evo or FIFA or a shooter like Halo or Gears of War. But I think we are seeing a lot of people enjoy 'entertainment' – whatever entertainment means for them – and that is what we are trying to deliver.

TechRadar: Talking a little about developers – Microsoft has bought some high profile games studios in the last few years, such as Rare and Lionhead. Is this strategy working for you? And do you intend to buy up more developers?

Stephen McGill: That's a question for the head of our game studios really. I think, from my point of view, buying up two amazing UK studios in Rare and Lionhead is clearly working. Fable 2 went straight into the UK charts at number 1 – particularly good when you consider there were so many multi-format releases that same week, which I think shows a lot. Rare are doing a cracking job with Viva Pinata and with the avatar side of things for the new Xbox Experience. Having that come out of a British studio is just fantastic for us.

TechRadar: Mentioning Peter Molyneux, and thinking of other 'celebrity' developers like Cliffy B, do you think that perhaps the games industry should focus more on its creative talent? There are thousands of developers out there doing great work not getting that recognition.

Stephen McGill: It's a really interesting question and I'm not sure what I personally believe, because on the one hand a great idea can come from anyone. And it doesn't take named celebrities in the industry to have 'a great idea' and we should nurture those gaming experiences and opportunities for people. On the other hand, this industry is about having fun and about story-telling and entertainment and there are – as in every other medium, whether it's comics or books or music or movies – big names who really deliver and people like Cliff Blesinski and Peter Molyneux are great talents and great storytellers with incredibly talented teams behind them helping them bring that story to life. So you want those kinds of 'celebrities' as shining beacons, steering the big experiences. And you want to nurture the talent that is coming tomorrow.

TechRadar: At the other end of the spectrum from the massive games like Fable 2 or Gears 2, you have the smaller level, bedroom developer scene which you are encouraging with XNA. How is all that panning out?

Stephen McGill: Well we are launching a community games service for the US and UK next month. People have had XNA development tools for a little while now, so it will be great to see what the community comes up with. Over the next few weeks (and indeed, over the next few years) it will be interesting to see what kind of amazing experiences people have thought about and what they come up with. And that just comes back to the fact that anyone can have a good idea.

TechRadar: And how does the quality control work for XNA games?

Stephen McGill: Well we will talk more about that as we get closer to launch, but essentially it will work on a peer review type system. If everybody in the community loves a product, then it will go up the charts, basically.

TechRadar: What do you think of those arguments by people like WildTangent's Alex St.John that the current generation of consoles are the last standalone games consoles we will see? (He bases his argument on cost considerations and the claim that MMOs and community-based gaming are what gamers are going to be willing to pay for in future).

Stephen McGill: Well he is of course entitled to his own opinion. I think there is plenty of opportunity for games consoles – Xbox 360 and Nintendo and Sony – which have clearly got a lot of life for those kinds of experiences that you have in the living room. You only have to look at things like Rock Band and Lips and Scene It! as well as things like Gears of War… I just can't imagine things like that being done in any other ways. But of course we can look back in five or ten years time and see whether or not he was right!

TechRadar: So what of the Xbox 720 then?

Stephen McGill: Hahaha! What's that?