The PSP homebrew market seems to be getting a little stale due to Sony's rather agressive stand on it as well as piracy. While I know many homebrewers never pirate, the mechanism for achieving each is through the same exploits in the software. Even if Sony could say they support homebrew, they could never support piracy, and as such have to take measure to close the doors to both.
However, I feel that they could open the door wide to homebrew development, and at the same time, keep the door shut to piracy. The newer ROMs are definately getting harder to crack, and often offer features that make you want to upgrade. Also, the uncertainty that "New Game X" might not run on your 1.5 ROM PSP, creates a bit of backpressure into upgrading. What's the answer then?
Include Java and/or Flash in the browser. Throw in something like Java3D (optimised for the hardware) and a handful of other useful game oriented Java libraries, so we don't NEED Lua or GCC to write programs. It may not be QUITE as fast as native code, probably would be on par with Lua, but would now be sanctioned by Sony, and would not be utilizing the same exploits as the pirates would.
Now, I know it's not ideal. Writing a SNES emulator for Flash or Java on a 333MHz MIPS core isn't very likely (though some may be fine like GBC), but this would be in Sony's favor as well, since, generally, to use a SNES emulator, you must pirate commercial ROMs. Plus, there's almost no way games written for Java of Flash could compete with commercial games in quality. The only "potential" point-of-failure in all of this is that companies could sell online flash games and bypass Sony's royaly scheme.
Unless Sony prevents SSL from working (since no one these days would use a credit card without SSL), or better, creates a Payal-esq site that works as a go-beween. That could even allow small-scale companies/individuals to charge a small fee (say $5) per download for said game/application, and Sony get's a small (say $1) fraction of that, within their royalty rate (whatever that may be). Now shareware writers can get proper credit for their work, Sony gets their royalties, we get to write software, Sony can still block pirates... everyone's happy.
Except those who want a GBA/SNES/Genesis emulator running on their 3.0 PSP. It wouldn't be a cash cow, but it might pay for itself (i.e., the work Sony employees would have to put into it to port Java et al to the PSP and find room in the ROM for it).
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