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It doesn't matter if it profitted - KZ3 was a tech demo, first and foremost. If the game was about making money, it would have had options like split screen - but the game was put out to show what the PS3 could do.

and anyone who thinks the game was made for $30-$40m has not done any research into the effort that went into the game. It was already in development well before the PS3's release, the they kept increasing the budget/team size to get it to look like the CGI demo they claimed was ingame...