For the record I DO not pirate games.
I'll cover why it would prevent me from buying a PS3 in a second.
http://www.gamespot.com/news/show_blog_entry.php?topic_id=23921409
Rumor: PlayStation 3s won't play borrowed, used, or rented games
Source: A series of sources conveniently amalgamated by Joystiq.
The official story: "We have made no official statement regarding coding for PS3 games."--Sony spokesperson.
What we heard: Given the billions of dollars it sinks into its movie, music, and games divisions, it's little wonder Sony is big on digital rights management. The company has implemented anti-copying measures for years and has admitted it has been installing cloaking rootkits to hide DRM programs. (It has since issued a patch to remove the rootkit.)
Those familiar with Sony's CD DRM practices were unsurprised when Joystiq reported that the company has patented DRM software that could prevent PlayStation 3s from playing used or borrowed games. The site cites US Patent #6,816,972, which is for "a device and method for protection of legitimate software against used software and counterfeit software in recording media." Specifically, the patented technology would verify that when software was inserted into a "machine" (read: console), it was registered to that machine. If it couldn't, the technology would prompt the machine to shut down, preventing the software from being accessed.
Such measures would be fine and dandy, were they targeted at pirated software. But the patented tech--which bears the name of Sony Computer Entertainment president Ken Kutaragi--is specifically designed to prevent used software from being sold. "Since only titles for which legitimate software has actually been purchased and which have been initially registered in the machine table can be used, resale (so-called used software purchase) after purchase by an end-user becomes practically impossible," it reads. Such measures would also prevent lent or rented software from being played.
But would Sony incorporate technology from Patent #6,816,972 into the PS3? On one hand, doing so would guarantee that each gamer would buy a new copy of each PS3 game, theoretically meaning bigger sales to help defray the steep cost of next-gen development. It would also remove the PS3 from the used-game trade, a market from which Sony gets no revenue.
However, there would be some major drawbacks to implementing Patent # 6,816,972 technology into the PS3. It would mean forfeiting the rental market to Microsoft's Xbox 360. Though there are signs that the game-rental stories are in decline--Blockbuster Video is reportedly shopping around its GameRush subsidiary--Netflix-esque services like GameFly are gaining in popularity. Then there's the fact that many people can't afford to buy a whole lot of games. When presented with a choice between a console that does play rented games and one that doesn't, which way do you think they'll go? There's also the risk of sparking a blacklash like the one currently raging over the BMG DRM rootkit.
Bogus or not bogus?: Sony has the technology, but it's too early to tell if it will use it.
Several reasons there why it would stop me.
First...I DO rent games to play...and if it won't play rentals...that's a HUGE strike against it...but not quite as huge a strike as the next item...
If the PS3 ever dies and I have to buy another one, there's NO freakin way I'm going to pay to buy every single game I own all over again just because of that.
I've been heavily anti-Xbox but I'd rather buy an Xbox 360 before spending any money on a hunk of junk which will cause me to lose all my games the second it dies.
Guess I'll buy two or three PS2's for back up so I can play my old PS1 and PS2 games and if this PS3 comes out with this stuff...I'll predict they'll come out with strong sales at first...but lose out BIG time in the long run, probably losing EVERYTHING they've gained in the market up until now...which would mean that the vacancy might be filled by Nintendo or Xbox, perhaps Nintendo could make a comeback if they don't kill themselves with their own innovative ideas of controllers, though if the PS3 does this, with the Xbox 360 being backwards compatible, if they could come up with some more Japanese RPGs to appeal to the Eastern areas of the World more...they could really dominate the market as Sony kills itself and finds out that such an act could potentially destroy it's game business.