It is clear that Sony need another massive franchise. Looking back over the SW sales on playstation platforms, Final Fantasy, Gran Turismo and Grand Theft Auto have been the biggets franchises. In the past, Sony also had franchises like Crash Bandicoot, and then Jak and Daxter, and few of their franchises now are that big.

Frankly, they only have 1 huge franchise at the moment, and that is Gran Turismo. Microsoft have Gears of War and Halo, Nintendo have tons of Mario games and now the "Wii" franchise. Having lost the massive system sellers of Final Fantasy and GTA (the latter is the bigger loss) they clearly need something to step into the gap.

Sony do have a lot of franchises, but they are just not that big. Ratchet and Clank games only sell a couple of million, Uncharted games will be selling about 3, LittleBigPlanet about 3, God of War about 3, Killzone about 3 (assuming they continue to make KZ games), Resistance about 2, Motorstorm about 1. However, none of them are as big as Gears of War 5, Halo 8, Fable 3.

They clearly need another mass market franchise. Buying Level 5 and marketing White Knight Chronicles in the west would be a start, some sort of replacement for the loss of FF exclusivity in the West, and it would also encourage more jRPG development on PS3, helping them in Japan. However, I think Uncharted is the big one. It is a series that can clearly continue for a long time, with individual games, so that of course you can make a lot of seperate stories, based on differnt historical figures. They definitely need to market this game massively. Gears was made big because of the "Mad World" ad, and they need to do something like that with Uncharted. It will obviously sell something like 2m because of the UDF players who loved the game, but ND have the quality to make a game that can be Sony's big franchise. If they were just expanded a bit, they would be able to make a game every year, which would obviously boost the popularity of the franchise (and make me happier).

So what do you think they need to do in terms of software?

I say Legend of Dragoon, or a new JRPG series, SONY neeed's a game that appeals to Japan which they dont have at the moment.

Actually, I think they would be better off trying to make more games that would become very popular in the west, Japan just isn't what it used to be, and has dropped in importance.

Clank Kart.

They already have something similar  to this, they just need to revive it again.

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I think Sony are better off letting the japanese developers make those games. Sony would do better in getting a game with the same popularity as say Gears of War in the west, because the market is just so much bigger.

They need to get CoD: MW2 as an exclusive. This would help PS3 decimate 360 sales in the holiday season.
Another good exclusive would be getting EA Sports + the multiple games they have. FIFA on 1 console would sell like crazy.

New IPs they could use would be a new racing game, while Gran Turismo aint on the market Sony could get some of the racer sales with a 2nd racer. Kinda like 360 has Forza + PGR.

Little Big Universe

i actually say that they have waited to long in making the iconic franchise. look at microsoft and nitendo they both established there major franchise in house and in there first gens. it also has too do alot with advertising, i mean if microsoft did not advertise halo as much as it did then it would have not been even close too what it is no.
welll that is my two cents