I think the PSP piracy issue is somewhat overblown (as is music/video piracy). Sure, the crap content doesn't sell well, but people still buy full versions of the higher quality stuff. There have copious non-US studies showing that people who pirate content end up buying more content than many non-pirates.
This is anecdotal, but everyone I know with a PSP owns physical copies of games. Even the people with CFW PSPs own physical copies of at least a few titles.
In my household, we hacked our PSPs for 2 reasons: (1) for emulation, and (2) because homebrew offered features that Sony promised but never delivered. For example, in 2004 Sony announced that a soon-to-be-released PSP feature was streaming radio. It didn't show up in 2005, so by the end of that year an individual wrote PSP Radio to stream Shoutcast. Years later Sony did release a PSP radio client but it was slow, buggy, poorly designed, and limited. Instead of learning from what others had done with homebrew, Sony released an official and inferior product. Is it any wonder that people like PSP homebrew?
One of the few official Sony features that was awesome was when we had a Location Free server hooked into our cable. When I sat at the car dealer waiting for service to finish, I could watch whatever TV I wanted on my PSP... streamed from home over the web to the waiting room at the car dealer (or wherever there was WiFi). It definitely made the time pass easier. Why couldn't Sony deliver other, much simpler features with equal quality? Why couldn't Sony adapt the PSP Location Free software to access other online content (maybe even Sony's official content)? Sony dropped the ball so many times, it's no wonder that people turned to the homebrew community to get the most out of the hardware.
Too many PSP games were crippled ports of PS2 games. Once more developers figured out to stop being lazy, the quality of commercial PSP titles improved greatly. Now that the system is at end-of-life, it's much easier to weed through the stinkers and find the good stuff. I think there are at least 4 dozen games worth playing, possibly more for those with a broader taste of gaming genres.
Even at the time, it was obvious that Sony screwed up the PSP because they were too distracted by launching the PS3. They did not dedicate enough resources to the handheld and let things coast. The resources they did invest in the PSP were almost entirely dedicated to DRM in the form of firmware updates to block homebrew, so few if any "real features" were added for a long time. These constant firmware updates were required to play newer games, punishing the honest people just as much as those who had installed custom firmware.
Even with all of their screw-ups, the PSP has sold over 70M (and is the first non-Nintendo handheld to sell over 10M). It's fun to imagine how things might have turned out if Sony had actually backed the handheld properly.
How many more happy PSP owners would there have been had Sony delivered more of their promised features in a timely manner? They actually promised the concept of a "network store" in 2005... years before Apple delivered one for the iOS.
How massively more successful would the PSP have been had Sony embraced the homebrew community and created official channels for independent developers? Sure, there will always be people hacking hardware, but Sony could have brought homebrew devs into the fold and made custom firmware far less appealing for users.
Sadly, it appears they haven't learned much from their mistakes. There's still no reasonably priced dev kit for the PS3 or PS Vita...
[/rant]
Edited by akator, Tue Jan 3, 2012 2:39 PM.