Abstract: Over the winter of 2005-2006 I substantially revised my thinking about interactive storytelling, and this lecture presents the results. I start by discussing three key assumptions that have held us back for years: that an interactive story should be a universal sandbox; that an interactive story will not have an internal economy; and that in a computer game, the player need not know the rules. I then introduce Ken Perlin's Law, a mechanism that provides the solution for the Problem of Internal Consistency that I highlighted in The Challenge of the Interactive Movie. Next I propose a new approach to designing interactive stories, by treating the player as a role-player (regardless of genre) and following up the implications of that choice. The second half of the lecture looks a game that takes an entirely different tack on interactive storytelling, King of Dragon Pass from A-Sharp. It abandons the branching tree structure and treats situations as functions and characters as parameters to those functions. I show how neither the branching tree nor the pure social simulator will do the job, but King of Dragon Pass creates a hybrid that may be the future of interactive storytelling.