http://www.scee.presscentre.com/Cont...p;NewsAreaID=2
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The new model is no longer backwards compatible with PlayStation®2 titles, reflecting both the reduced emphasis placed on this feature amongst later purchasers of PS3, as well as the availability of a more extensive line-up of PS3 specific titles (a total of 65 titles across all genres by Christmas).
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Yet another rather usual business decision from Sony. They seem to believe that price is the only reason the PS3 is not selling well. Will be interesting to see if they are correct. Also unclear is if this will be exclusively a SCEE initiative or if they will follow suit with SCEA.