This is part of the equation that has been brought up before by myself and others. Which almost immediately gets ignored. The PS3 has a far lower profit margin for developers. Which translates into a higher minimum sales requirement. Developing for the PS3 is a serious gamble. There is a smaller margin for error. For many developers that makes developing for the PS3 a uncomfortable proposition.
Sony does have higher licensing fees from what I understand, and it does not look like it is going to change any time in the near future. This is how Sony really makes the money off of their machines. The royalties are being used to offset the development and manufacturing costs of the console, and more so to support the online development. With the low attach rate, and install base there is nothing to drive their fees down.
Sony has invested in the cartridge format of this generation. Do not be fooled by the effectiveness of modern disc drives. Cartridges had serious benefits including no load time, and built in upgradeable technology. Their was a serious technological debate at the time of the 64 no different then today. However at the end of the day the proprietary expenses of the cart format did hurt the 64 when it came to developer support. Sony is making money off of Blu Ray manufacture in the same way that Nintendo did.
Sony has also invested in a complex architecture which requires more resources to develop for. Cutting edge coding tools are not free, and most definitely not cheap. While you can develop for the other two consoles at a much smaller expense. Sony is trying to correct this, and it shows they can learn however its a little late to be providing great development tool support. That should have been in place a year before the console launched.
Everything about the PS3 drives up development costs, and decreases profit margins. The royalties, format, support, and technology all form a perfect storm to scare away developers. The most damning thing is just how many copies of a game a developer must sell to make a profit, and we can even ignore the high end games on this issue. Look towards the low level games. The developer is not looking to sell millions. They are looking to sell to a smaller or niche market.
During earlier generations it was possible to sell a hundred thousand copies of a game over a life time and make some decent money as long as the development costs on the game were small. You see these games in the bargain bin all of the time. However with the PS3 your sales must be significantly stronger then they were before, and it will be harder to get to that minimum profit bar. Perhaps now you need to sell a hundred and fifty thousand copies of a game. That doesn't seem like much unless your the guy trying to sell a fishing simulator, hunting simulator, or a puzzle game. Some of these games have small budgets, because they will have small sales. The developer is comfortable with that. However the more they have to sell to turn a profit the less likely they are to succeed. Many developers live on marginal profits, and did so the last generation. Can they even survive developing for the PS3?
Like I said earlier this will most likely be ignored by those that should be paying attention. This is a serious flaw in the Sony plan, and its almost copying the exact same mistakes that Nintendo made with the 64. These things hurt developer support not only on the high end games, but more dramatically on the low end games that engender the bulk of a library. Not every game is going to be popular genre, or a multi million selling block buster.
