In Part I and Part II of our three-part interview with Electronic Arts CEO Larry Probst, he addressed the hardware difficulties facing Sony and Microsoft, and the company's ambitions for the Wii. Here in the closing segment, he stands up for EA's microtransactions policies, defends EA from accusations that it doesn't innovate and hints at EA's intentions toward Xbox Live Arcade and PlayStation Network.

Average revenue per user, or ARPU, has long been a key metric among mobile carriers and other industries. How much of EA's recent practices--$60 next-generation titles, higher-priced special editions, in-game advertising, microtransactions and charging for cheat codes in the 360 version of The Godfather--have been aimed at raising EA's ARPU?

That's the goal, obviously: on top of the packaged goods transaction, to generate incremental revenues, whether it's through microtransactions, dynamic in-game advertising or whatever. We think that's something important to the future. It obviously contributes to higher margins overall for the company, and it's something we're focused on for multiple franchises. Need for Speed Carbon is a perfect example. We're generating a lot of microtransactions on the Xbox 360. We've got both static and dynamic in-game advertising going on. It's pretty significant. Those are margin drivers for that product.

There's been a good deal of controversy in the enthusiast press and on message boards about the microtransaction practices of EA and other publishers. There's even a blog called GamerFeast, that has an Xbox 360 Microtransaction Tracker. As of early November, EA's fully loaded games--calculated by taking the price of the game at retail and adding to it all of the various microtransaction costs--held 3 of the top 5 spots, with Need for Speed Carbon topping the list at $94.97. Isn't there a concern that EA may be strip-mining its most avid consumers with these strategies, even if it does extend the life of the game additional content?

We're working our way through that. With some of the initial titles, we did hear complaints from consumers, but I think we learned. We did a better job on Need for Speed Carbon, and we're not hearing those same kinds of complaints or negative feedback about that product. It's generating a lot of money through microtransactions. So it's a learning process, it's iterative and we'll get better about it as we go. Need for Speed is the first example of getting smarter about it.

The other complaint that gamers have is that with the next-generation versions of some of your biggest franchises, like FIFA and Madden, they're paying more money for fewer features--fewer leagues and stadiums, no owner mode, etc.--yet those features can be found on the lower-priced current-generation versions. How do you justify the price difference, and how soon should gamers expect feature parity across both generations?

We heard that complaint more frequently on the first generation products. As we get into the second and third iterations, I think that's not so much of a problem. It's more expensive to develop on these [new] platforms. We've got to figure out some way to defer and recoup those costs. The real answer is, when you get these first iterations, it's a rush to the finish line to get these things ready for the launch windows. In year two and year three, we start to catch up and deliver more than what the consumers expect in terms of features.

Not to put too fine a point on it, but the European press in particular complained about this year's next-generation version of FIFA.

This year's FIFA? On 360?

Yes. Because there were fewer stadiums and leagues.

I'm actually surprised to hear that, because the reviews on this year's FIFA have been pretty positive. I think the Metacritic rating is up over what it was previously. So somebody likes it.

EA is often criticized by gamers and the enthusiast press for not being innovative, that your company only puts out sequels, licensed products and annual sports games. But you're also making games like Spore and Army of Two; there are the Steven Spielberg games which have yet to be shown; and a number of your executives have been talking about the importance of new IP. Why do you think EA doesn't get credit for its innovations?

Because we don't have journalists like you writing articles about us. [Laughs.] Look, I think you're absolutely right. Last year, about 40 percent of our business was wholly owned intellectual property, and our goal is to move that up to 50 percent or better. We've got some great things in the pipeline. You mentioned Spore, there's Army of Two. We're resurrecting the Command & Conquer franchise.

What else have we announced that I'm allowed to talk about? Skate is a really cool-looking game. That should give Tony Hawk a run for his money. Tony's getting old.

And doing really well. It's unbelievable how well that system has sold.

One would think that the price will come down to $99 at some point. Are you expecting that to happen next year? What impact would that have, and how do you develop against that?

I would not be surprised to see them take that price down next year to $99. There was some consideration given to that happening this year, and they decided that $129 was good enough. That turned out to be right. But it would not surprise me to see $99 next year. That will further stimulate sales. I could imagine, at that price point, that they could sell another four or five million units next year in North America. That's good news for us, because we've got the leading market share on that platform. We'll continue to support it, and we'll have a number of new titles in the mid-teens on that platform.

You've said that new IP won't be coming to the PS2. What approach are you taking to the PS2 in the back half of its life cycle?

I don't think you're going to see anybody launching brand new IP dedicated to that platform. I think it's a harvesting strategy. Making sure you're delivering quality products at attractive price points to consumers. In terms of our development strategy, in the past we've done 25 or so titles a year. We'll probably pare that down to 15 or so next year and reduce it a little more in the following fiscal year. That's the strategy. Focus on the titles you know will do well, deliver high quality iterations, and price them competitively. And at $99, there's a whole new consumer that buys at that price point.

Any plans for smaller downloadable games for Xbox Live Arcade, Sony's E-Distribution or Nintendo's Virtual Console?

Yes on Xbox Live Arcade. You'll see a couple of titles from us in the not too distant future. We've got to work through the details on Sony's platform.

Business model. They have one model in mind, and we have something else in mind.

Thanks for your time, Larry.