This is genius because it means Sony is actually responding to all the emulation that already going on with the PSP. Homebrew and old school games might not be up to par with GTA:LCS, there's a lot of play time left in that vast collection of old school games. Compare that to $40-$50 for new PSP titles and Sony has some stiff competition.
So here I am on 2.0 (don't own GTA yet), which means that any new PSP titles released (From Russia with Love, Exit, King King, the upcoming classic trilogy LEGO Star Wars) won't work on my system. Right now I'm fine with that since there's a decent library of pre-2.0 games that I have yet to play including Star Wars Battlefront II, Lumines, Wipeout Pure, Burnout Legends, SOCOM, Ridge Racer, GTA:LCS and Tony Hawk (just got my PSP for Christmas and been busy with hombrew/emulators).
OK, so I'm fine with 2.0 because my options are still pretty open. And I have to admit to having hopes of playing Goldeneye on my PSP with PSmonkey's N64 emulator some day.
So Sony has to compete with all the current emulators and potential N64 emulation. (And I think N64 games rival new PSP games anyways). Adding REASONABLY PRICED PSone game downloads and Flash capability might just be enough to make me upgrade. As cool as they are, I find myself playing very few old school games from beginning to end or for any length of time. Instead it's like that first time you loaded up your iPod, and you went from song to song playing 10 seconds of each song.
Sony also has to compete with the Nintendo DS Lite. One of the big complaints about the PSP is the lack of games. I don't have that complaint. My complaint is that I can't afford the games that are out there. DS games are $10 - $15 less than their PSP counterparts, and backwards compatibility with GBAdvance means a huge catalog of LEGAL games for Nintendo DS owners. I still have a GBAdvance to play GBA games, but still, I guess it's nice to be able to play them all on one system.
So Sony has to do something that will give the PSP an advantage against the DS in the GAMES department while enticing current users to give up Sonic and Mario emulation on the PSP.
I can totally see upgrading my firmware for the ability to download PSone games for a REASONABLE PRICE. What's reasonable? I'd say $5 or so would be fair. You'll pay less than that on eBay for a PSone game, and anything more than that may keep me from upgrading. Here's a few PS1 games (or game series) I'd like to see available on the PSP -
GTA2 (gotta love that 2D GTA!)
Tony Hawk
Jet Moto
Cool Boarders
Gran Turismo
Tekken
Ridge Racer
Driver 2
a few puzzle games
Resident Evil
Tomb Raider
a couple of Star Wars titles
Syphon Filter
Wipeout
And official Flash support would be better than a hacked version of it. I've never been huge on playing flash games on the computer but I can see it being pretty cool on the go.
One other thought on this is that many of the best PSP games have already been redone for the PSP at PSP prices. A lot of the games on my list for example. If Sony does price these games at $5 it will either force developers of new PSP games to get serious about innovative game design or abandon the system altogether. Interesting times!
Playstation 1 on the psp would be great... even if it did require a filmware update.
Heres the Playstation games I will put on my psp when the ps1 emulator is released:
Metal Gear Solid
Metal Gear Solid VR missions
Resident Evil
Resident Evil 2
Resident Evil 3
Tekken
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