New glitch for PlayStation2

Sony is pinning its future profits on PlayStation

Sony is facing fresh embarrassment after the discovery of a new flaw in its much-hyped PlayStation2.

It appears that users in Japan can manipulate the console to watch DVD software sold overseas.

This is in breach of an agreement that consoles can play only DVDs sold domestically and equipped with disenabling codes.

The latest problem comes after the discovery of a memory card flaw which had occasionally erased game data or corrupted programs running DVDs.

Commenting on the DVD glitch, a Sony spokesman said: "We have not launched a recall or stopped shipments, although we can't completely dismiss for now the possibility of a recall."

PlayStation2 has sold more than one million units

Hideyuki Irie, of industry body DVD-Forum, said: "Film makers in Hollywood could file a lawsuit against the maker because of violation of copyright.

"Sony could be accused of selling DVD players whose functions on copyright protection can be easily altered," he said.

Sony said it had already taken action to fix the problem by modifying the software of its consoles to limit use of the DVD function.

As early as next week it planned to start shipping PlayStation2 players with an upgraded utility software disk and memory card that would prevent users from changing the regional code.

Share price hit

PlayStation2, which was launched in Japan just two weeks ago, has already sold one million units.

But the problem with the memory card - there have been 1,000 complaints so far - has hit Sony's share price.

From a record high of 33,900 yen at the beginning of March, it lost nearly a quarter of its value.

The stock had begun to stabilise this week, but on Friday the DVD fault sent the price down 1.37% to close at 26,640 yen.

One of PlayStation2's selling points was the inclusion of a DVD player, and with a $362 price tag it offered a competitive alternative to many of the stand-alone DVD players already on the market.

Copyright sensitivity

DVD players sold in Japan can usually only play disks with a particular regional code - there are six codes in all.

"These codes were created because of demands by Hollywood film makers who usually launch new movies in the United States first and in other regions later," said Hideyuki Irie.

Because movie companies were very sensitive over copyright, fearing a loss of revenue if audiences did not bother going to cinemas, DVD player manufacturers were anxious to avoid upsetting them.

"The Sony issue may add to the difficulties in ongoing format negotiations between music providers and DVD manufacturers and could even bring a new demand from film makers to reinforce codings," said Mr Irie.

New competition

Sony has a lot riding on the profits from PlayStation2, which it hopes will keep it at the top of the lucrative video games market.

Sony's aim is that the console - expected to be able to hook up to the internet from next year - will eventually rival the personal computer.

But it now faces competition from Microsoft, which recently announced that it plans to launch its powerful X-Box next year.