Just a few years ago, Sony seemed unstoppable. PlayStation had changed gaming fundamentally and was a huge success. Then came PS2, one of the most eagerly awaited consoles in history and another multi-million selling market leader. With such massive sales, superb brand recognition and a firmly established position at the front of the pack, who would have predicted that things could go wrong?
But go wrong they did. Sony's disastrous E3 conference last year left gamers questioning the machine's high price point, the performance of the SIXAXIS controller, the giant enemy crabs. Then came the European delay and the comments by Sony executives which led to accusations of arrogance. Not to mention factors which Sony had no control over, such as the healthy adoption rate for Xbox Live and 360 and the huge popularity of the Wii.
The next few months, weeks even, will be crucial for Sony. Now more than ever, the company needs to communicate exactly what its new machine can do and why it's worth Â£425.
And judging by Phil Harrison's GDC keynote, Sony understands this. His conference speech begins at 10.30am PST today, but Harrison delivered a full preview at a special event for selected press last night. There he unveiled a new vision for PlayStation 3 - what Sony's calling 'Game 3.0'.
It's about user generated content, in short. Sony wants to put the spotlight on consumers, and encourage them to create and customise their own gaming experience. According to Harrison, the focus is on "leveraging the convergence of technologies, from broadband and video chat to supercomputer-speed processors, to make gaming more interactive and dynamic than ever before".
At the heart of this vision, as confirmed by Harrison last night, is PlayStation Home. It's a new real-time, networked 3D community where users can interact, play online and share their interpretation of the PS3 experience with other gamers.
Available as a free download from the PlayStation Store, Home lets users create a 3D avatar, choosing from a wide range of body types, skin tones, ages, clothes and accessories. So no, it's not dissimilar from Nintendo's Mii system - but there's a much bigger array of options to choose from.
Users also get a virtual living space in the shape of a sleek, modern apartment, which they can also customise. As demonstrated by Harrison, you can use any of the content stored on your hard drive - for example, you can hang a photo of your gaming clan on the wall, play game trailers on your virtual TV, and listen to MP3s on your Home stereo. You can also download special content, such as Resistance: Fall of Man wallpaper. "It's your place so it's your rules," Harrison explained.
Then there's the Hall of Fame, a room where you can display 3D trophies that you've won by completing in-game objectives. These aren't necessarily trophies in the traditional sense - the Hall of Fame in Harrison's demo featured large Loco Roco and Killzone characters in glass cases, for example.
You can also view the awards for games you don't yet own. These are shown lined up as far as they eye can see in a huge virtual room - it's hard to describe, but Star Wars fans might suggest a nod to the senate which appears in the prequels.
You can invite friends to your Home to see your trophies, explore your apartment, share your content and join online games. Communication is done through text, audio and video chat, and avatars express their emotions through animations.
There are other areas to explore outside your apartment, accessible via the World Map. The version of this shown by Harrison featured icons which represented virtual spaces belonging to developers, publishers or specific games - but there are bigger plans for the future.
"We expect it will be not just about Sony content, not just about game content, but a much wider network," Harrison said. "Over time we expect it to expand to non-game brands as well, so you could imagine going to visit a space that might be provided by a famous beverage company or a cool clothing company or a record company, or even a retailer, or a magazine or a website.
"So we think this is a very powerful way to bring community not just to games, but to other forms of lifestyle and entertainment - all built around PlayStation 3."
Harrison concluded the first section of his speech by revealing that Home is currently in the closed beta phase, with a public beta due to begin in April. Home is down for a global launch in the autumn.
Then it was time for a look at Singstar, a series which has been a huge hit in Europe (with more than 7 million units sold) but which is less familiar to North American gamers. The PS3 version is "all about extending the experience online in two directions - downloading content and uploading content", according to Harrison.
Users can download songs in the Singstore, and have the option to watch a video preview streaming off the server. They can upload videos of their performances filmed with EyeToy to the My Singstar network, receive ratings from other users and compete in contests. There will also be downloadable content such as wallpapers featuring popular bands.
Harrison declined to show off the game by singing himself, opting instead to simply tell the audience, "It gives you a sense of where we're going with the integrated community and commerce, blended together in a very compelling experience for PlayStation 3."
Singstar PS3 launches in Europe in early June, with a US release due to follow in autumn. Harrison didn't say how many tracks will be available at launch, but said that Sony is "working very closely with the music industry to get a very wide selection of music available day one on the network".
With the Singstar section out of the way, it was time for what was undoubtedly the highlight of Harrison's keynote - the first ever public showing of a new game titled LittleBigPlanet. "It's probably the fun and creative embodiment of the Game 3.0 concept," he said.
LittleBigPlanet is being developed by Media Molecule, the studio set up by former Lionhead developer Mark Healy. MM won critical acclaim last year for Rag Doll Kung Fu, a PC title which also caught Sony's attention. "We loved this game and we thought it was a really great embodiment of the power of the independent gaming community building really great games with their own inspiration, their own money, and sharing it widely over the network on the PC," said Harrison.
Sony has now spent around a year working with Media Molecule on LittleBigPlanet, and Healy and MM co-founder Alex Evans were on hand to demo the game last night. Healy began by telling the audience, "This game is basically all about creativity,"
When the game starts, players find themselves on a blue and green planet divided into plots. Their character starts out as a small brown creature who appears to be made out of wool, nicknamed Sackboy. The first task is to find out what the character can do and how to interact with the environment. Once you've mastered the basics - LittleBigPlanet is designed to be very easy to pick up and play - you can start to create your own games.
This is done by using your character to place and manipulate objects, using the Sixaxis controller and a simple cut and paste type system rather than a complex level editor. Objects are made out of materials such as wood, fabric and metal, and behave as you'd expect them to in real life.
In the demo, the gameworld appeared as a sparse backyard environment into which Evans began placing objects - a block of wood, to which he attached a cog his character could run around, for example.
Then came a tree made out of fabric, followed by a giant orange to which Evans added bug eyes and deely bopper hair. He showed how you can also customise your character by adding deely boppers, while other characters appeared wearing space suits and elaborate Chinese dragon-style headdresses.
"The cool thing is it's not just about making pre-made objects," Healy said. "You can lift the customisable level, do whatever you want with it, make it look how you want it to look." So, for example, you can create 'stickers' using content on your hard drive, photos taken with EyeToy and so on, and slap them wherever you like. "There's no limit - you can literally cover the entire world."
The first part of the demo only lasted a couple of minutes, but already there was a sense of just how many options and how much freedom a LittleBigPlanet player will have. Despite this, the game didn't appear to be too complicated - everything flowed quickly and smoothly.
There were now four characters on screen - the maximum number of players - with Harrison joining in. They lifted up a giant curtain at one end of the backyard, revealing the start of a previously created game. The object of the game, Healy explained, was to collect a resource - sponge.
At the beginning, the characters were simply running and jumping around a variety of objects, and again everything appeared fast and fluid. They skipped along branches, swung on ropes and zoomed around with jetpacks. Although the players were competing for resources, there were moments where they had to co-operate - combining their strength, for example, to move a heavier object.
All too soon, it was time for the grand finale. The four characters jumped on a giant skateboard and began waving as it zoomed down a steep hill. One of the players pressed a button to take a snapshot of the moment, and the demo was over.
"As you can see, it's all about empowering a community of gamers by embedding the creative tools into the game experience as well, so they don't even know they're editing and creating," Harrison said.
"But the key, after they've edited and created, is to share, so we're going to give you a glimpse of how that could work."
It really was a glimpse - a short, fast film which seemed to suggest that once you've uploaded the game you've created to the PlayStation Network, other users will be able to play and rate it. There was a rankings chart, apparently showing the most popular games on the Network. A messages section to communicate with other users. A forum-style comments feature where players posted their thoughts on the game. It was all over very quickly, and followed by a long and loud round of applause.
Next up was Warhawk - currently best remembered for playing a part in Sony's disastrous E3 conference. But according to producer Dylan Jones, "The demonstrations that you've seen earlier are just an example of the exciting and innovative ways that Sony is extending the feature set for PlayStation Network.
"It is with that I am incredibly excited to announce a strategic change for the game Warhawk. The exclusively online multiplayer focus will allow the team to leverage many of the features you've seen here tonight... It will allow us to truly deliver a fantastic online war game experience."
It all felt a bit low key following the excitement of the LittleBigPlanet demo, but then Harrison was back on stage and on to a new topic - PlayStation Edge. "This is something which is very relevant to the game developer audience who will be in the keynote tomorrow, but it's also very relevant to consumers," he said.
"What PlayStation Edge is all about is taking some of the advanced technology that we have invented within worldwide studios to support the wonderful creativity and technology you've seen in games today, and deliver and give that technology free of charge to PlayStation 3 developers within our PS3 developer network."
Harrison then introduced GCO Replay, which he described as "an incredibly powerful, industry-leading RSX profiling tool". It allows developers to "eke out the highest possible performance from the graphics chip inside the PlayStation 3, and to give incredible feedback to game designers".
He followed this up by revealing that developers will also get "highly optimised" libraries for PS3 in the areas of geometry processing, animation and compression. "These are tremendous technical and creative advantages that PlayStation 3 has, and we want to give all developers access to the absolute pinnacle of technology." A short video of the new Killzone followed, with some amazing animations and effects on show. More on the game is promised for E3 in July.
Summing up his speech Harrison told the audience, "You can see that we have a tremendous decade of growth ahead of us, powered not just by the technology of PlayStation 3 but also the kind of experiences we can unlock through the power of Network - which is based around the Game 3.0 concept.
"It's a very exciting opportunity laid out in front of us, and it's one that I hope our developers, our publishers, both internally and externally, embrace, really run with and take to incredible new heights to build some incredible entertainment experiences for PlayStation 3."
So, what conclusions can be drawn now it's all over? Well, LittleBigPlanet was clearly the star of the show. Visually, the game is charming, exciting and engaging. The interface looks beautifully simple, the range of options for customisation and creativity simply stunning.
Add to that the option to play other people's games, share your own and get real feedback from real gamers on what they think of your creation, and it's clear that LittleBigPlanet could be something really very special indeed.
PlayStation Home didn't have quite the same sense of innovation and novelty about it, and there are a few questions still to be answered. Why would someone want to watch a game trailer on a virtual television when they're sitting in front of a real life television, for example? But Home certainly looked impressive, and it will be interesting to find out just how it will all work and what the full benefits are.
The big question is whether it will all be enough to get Sony out of trouble, or whether PlayStation 3 will continue to be weighed down by a poor software line-up and high price point. Both of those problems, however, will be solved over time. And meanwhile, innovative ideas like LittleBigPlanet will go at least some way to making PlayStation 3 owners feel that all that money they spent has got something unique and different.
There's no doubt that Sony's harshest critics will accuse the company of jumping on the user-generated content bandwagon. But perhaps it's time to focus not on what Sony is doing wrong, but what it's doing right. And perhaps, for the first time in a long while, Sony is doing enough things right to make that possible.