Next Generation had a chance to chat with Phil Harrison after his GDC keynote last week. Not much was given away in the chat that we didn’t already know, but there were interesting little tidbits.

Is the business model for digital distribution over PlayStation 3 now in place?

For the most part; yes. There are obviously some details and some contractual relationships, we have to dot Is and cross Ts but in the big picture, yes.

So…how does it work? How is the money divided?

You’ll understand that is something that I’m not going to share with you. It’s something we share under NDA with our developers and publishers. Plus, I am not the third party guy any more; I’m the first party guy so I’ll duck that question on a couple of counts.

Yet some media outlets are still getting it wrong. USA Today reported that there will be a two-tiered pricing structure for PlayStation Network Platform?

I think that some analysts must have been in a different presentation. Some things they got wrong, and others they speculated on areas that we did not even touch upon. Obviously we hope that this conversation can help to clarify the message.

So is the price decided upon?

I’m not going to comment on that.

Do you believe this complexity will lead to a lengthening of platform cycles?

You’ve seen with PlayStation Portable how a hardware platform can grow through operating system upgrades and although we have not gone into specifics you can assume we’ll follow a similar strategy for PlayStation 3.

It’s a static device from hardware point of view but it’s a dynamic platform, from a software point of view. That is something we couldn’t do on PS2 or PS1 so I think that will absolutely lengthen the lifecycle of the future assuming that the consumer finds those offerings compelling and I think they will.

How would you describe the differences between PlayStation Network Platform and your competitors’ offerings?

This is going to sound like a really soundbitey answer but the biggest difference is that it’s on PlayStation. We are a 100 million, 200 million unit company. We are he pre-eminent brand for interactive entertainment worldwide. We have a reach and a market share that dwarfs our competition.

Now, maybe in US it’s not such a runaway leadership – Microsoft is definitely a more vigorous competitor here than anywhere else in the world – but in some countries PlayStation is the videogame business.

The fact that PlayStation is making this push is the biggest differentiating factor. The second one is that the basic service is free. We’re taking what we did on PlayStation 2 where online gaming is free, so why should we suddenly charge for it on PlayStation 3? Although, clearly, we are going to have premium offerings where you can pay to download content.

The other one is that – and I don’t want to acknowledge too much one of our competitors – but by calling it Xbox Live Arcade it pretty much tells you what it does on the tin. Whereas we’re going to be much more entertainment-based, much wider – music and movies and games and other forms of digital entertainment and so hopefully it will be more impactful to a mass market.

Next Generation – A Nice Chat with Phil Harrison