I think it was inevitable that something like this would emerge: a top console maker integrates with the Internet and start creating online communities, to combine its graphics system, user-to-user interaction and build a following.
And it looks like Sony has beat the others in the race with its announcement of the Playstation Home. It leverages the enormous power of the PS3 to render truly gorgeous graphics. News of it is already starting to make the rounds as a serious contendor to other 3D MMO systems like SecondLife. Since I missed the Game Developers Conference last week, but I believe it was announced according to this article.
Since I haven't actually tried it, it is difficult to tell how well it works over a network link. Also, graphics aside, it still remains to be seen what you can do inside this virtual world. From reports, it is much more like a true-3D system competitive to Cyworld, where users have homes they can decorate, buy stuff online, etc. and used primarily for socializing with friends. There's no word about programmability or if there is a way to develop new items or objects within the world, as you can in SecondLife. This is what has helped make SL so popular, and has contributed to its growth. Plus, it's free. On the other hand Sony certainly has a huge marketing machine, an established base of fans, and a network of games that could integrate with it. This might even give MySpace a run for its money in terms of social spaces.
Is this the death knell for SecondLife or MySpace? Let me know what you think.