Microsoft's Aaron Greenberg

Microsoft's just announced that Kinect will cost £129.99 / €149.99 and come bundled with launch title Kinect Adventures.

It's also revealed a new Xbox 360 4GB model, to be launched in the UK on 20th August, priced at £149.99 / €199.99.

The 4GB Xbox 360 plus Kinect and Kinect Adventures will be available as a bundle for £249.99 / €299.99 when Kinect launches in the UK this November.

Last night, Eurogamer chatted to Xbox product director Aaron Greenberg to pose some burning questions on Microsoft's hot-off-the-press announcements. Read on for the result.

Eurogamer: Kinect sounds a little pricey. Are you confident Xbox 360 owners will see value there?

Aaron Greenberg: Absolutely. We obviously don't make pricing decisions without doing our research. We've done a number of pricing studies on a global scale across a whole variety of audience segments. When we talked to consumers about the different types of experiences you get with Kinect, we found that that sensor with the full game at $149 does quite well.

We've even seen some of the retailers put up some speculative pre-orders for just the sensor as a standalone at $149. On Amazon.com, for example, it jumped to one of the top two things in the videogame category coming out of E3. Now we're saying it's not just $149, but you're also getting a full $50 retail game as part of that.

That said, there's a tremendous opportunity here to drive new console sales. There will be a whole new wave of consumers looking for all new ways to experience games and entertainment. To be able to do that with the console plus the sensor and the game at that value is pretty unprecedented.

Eurogamer: Why are you bringing a new Xbox 360 4GB model to market?

Aaron Greenberg: It will effectively replace the Arcade console. We see it as a great value entry price point for consumers. We're upgrading the storage to a full 4GB, which is quite a bit of storage. At $199 we think that's a great price point. That 4GB is built-in flash memory, so it's not a hard drive. There is a hard drive bay built into all the new Xbox 360s.

At £199 you've got the 250GB SKU, which is selling exceptionally well. We've heard some good initial feedback from the first week of sales. I know in Europe it has been really strong. Here in the States, just the first couple of weeks for the month of June, NPD data put Xbox 360 console sales ahead of both the PS3 and the Wii.

Consumer demand seems to be really strong for the new console. To be able to add the remaining piece of the puzzle now for Kinect and how we're bringing it to market, and the price points, is the focus of the announcement.

Eurogamer: Apart from the flash memory and the matte finish, are there any differences between the 4GB model and the 250GB model?

Aaron Greenberg: No. It's got Wi-Fi built in. It's the same form factor. The difference is finish and storage. They both come with Wi-Fi. They both come with a controller. We're excited to have a new console this holiday at different price points for different types of consumers. And the same with the bundle and the Kinect sensor and Kinect Adventures.

Eurogamer: What impact do you expect Kinect, the new console and the new bundles will have on sales of the Xbox 360, and looking ahead, the rest of the Xbox 360's lifespan?

Aaron Greenberg: It'll do a couple of things. All of our research shows there's a massive market opportunity for this to drive new console sales to new consumers. Obviously, where we're at in the life cycle, we're talking to a more mainstream casual consumer that's coming in at this point in time.

This is - quite frankly - the exact type of experiences they're looking for, that have that broad appeal, that enable you to experience games and entertainment in whole new ways. We'll have 15 launch titles covering everything from sports to dance to things like Adventures, which will be available at launch this November.

As we think about the life cycle, this generation has been quite a bit different than what we've had in prior generations. The fact that we've got the majority of our console owners connected online, that we're able to provide new updates and new experiences without requiring you to buy a new console; it's quite a bit different than what we've seen in the past.

With Kinect and what we're doing there, a lot of people have talked about this being the type of leap you would typically see when you went to a new generation. But the nice thing is we're able to bring that next generation experience to market this generation.

We already have storage. We already have high definition gaming. We already have a connected online community. So adding the sensor to the experience enables us to unlock a whole new variety of games and entertainment. We're pretty optimistic this will provide multiple years of life to the current life cycle.

Eurogamer: You haven't announced a European release date for Kinect.

Aaron Greenberg: In North America it's 4th November. We haven't said anything beyond November. So the date in November has not been announced for Europe yet. This bundle will launch in November. It's essentially the launch of Kinect. The date has not been announced.

Eurogamer: Have you saturated the hardcore market?

Aaron Greenberg: It's a good question. Our approach is, it's not an or, it's an and. We can deliver our best core line-up we've ever had and deliver whole new experiences for a broader consumer.

We have that unique ability, that's unique to us in this marketplace. We are that two-sided coin, if you will. We can deliver games and entertainment. The best core experiences and new experiences for the broad market.

So if people are going to buy one system, we offer the most for that value. Just core gamers alone this holiday, we have Halo: Reach, we have Fable III, we've got new blockbuster third-party titles like Call of Duty: Black Ops. We've got our biggest core line-up that we've ever had. At the same time we're launching Kinect. There hasn't been any sacrifice as we think about the core market.

Eurogamer: You must have seen the reaction to your E3 2010 Kinect reveal from some hardcore gamers. How do you respond to the critics who say, "This doesn't offer me anything"?

Aaron Greenberg: Well, we weren't too surprised frankly, because we knew what we were unveiling with our launch line-up was targeted primarily at a broader audience.

But there are a lot of great experiences there for everyone, whether it's new ways to access and control your entertainment, be it movies and music, or new gameplay experiences. Dance Central, where Harmonix is building a new music game from the ground up for Kinect, is a great example. Nobody would say Rock Band is just for the casual audience. Everyone plays Rock Band. This is another great experience in that line.

That said, we know there are a lot of core games in development for Kinect that we obviously have not unveiled and announced yet. We feel confident that as we start to share more of that news, that reaction will be muted, for sure.

Eurogamer: There's been some confusion surrounding Project Milo. Can you settle this once and for all? Will you bring it to market?

Aaron Greenberg: Peter and the team are doing great work on Project Milo, and he just demoed it at the TED Conference. It's definitely not just a tech demo. They're building something pretty unique and compelling.

We leave it up to Peter and his team to determine what that game is and when it would come to market. All we've said is that at this point in time it's not coming this holiday. But as you can see it's definitely quite a bit more than just a tech demo.

Eurogamer: So there's a chance it will be brought to market?

Aaron Greenberg: Sure. It's a great showcase of the technology and it has the opportunity to be a very compelling experience. You've seen a huge leap over the last year from what we unveiled at E3 last year, to what Peter is showing this year with Project Milo.

They'll continue to build on that. What that turns out to be and how it gets brought to market all remains to be seen. We're fortunate to have one of the brilliant creators of our industry pushing the boundaries of creativity with this project. It's been exciting for people that have seen a preview of it.

He [Peter Molyneux] is best to speak to about what this product will eventually become.

Eurogamer: So it's his decision whether it gets released?

Aaron Greenberg: Well, there are a whole variety of factors. But for now it's in Peter's hands. Peter serves as our creative director for all of our studios in Europe. What he and his team at Lionhead are doing with Project Milo is just one example of the type of great innovation that's coming out of Europe.

What that turns out to be and all those details all remain to be seen. It's not something we're bringing to market this holiday, so we're going to be a bit more vague about it than if it was launching in a couple of months.