As Sony sees it, they’re biggest issue with PSP development is not that third-party games aren’t successful (actually, most of the handheld’s most beloved games come from third parties), but rather than Sony itself hasn’t focused enough on the system and that the company must remain agile in continuing to pursue third-party developers. According to SCEE VP Zeno Colaco:

"We need to revitalize the developer community to get behind the PSP. One of the issues when you rely on a business model that relies 25% on games from Sony and 75% from other publishers is that if they start to refocus, you can’t recover that space because you don’t have the internal capacity, so we’ve probably suffered from that."

Colaco went on to explain that Sony will be encouraging developers to make "quicker, cheaper games" (read: casual) games for the PSP, more along the lines with what has been released on the Nintendo DS. Colaco also believes that third-party developers will be enticed by the future of the PSP, particularly as it applies to the handheld’s future integration with the PS3 and PSN. He is hoping to see these new services implemented "over the next two years," and that it will be enough to steer companies towards PSP development.

One thing is for sure, with Ready at Dawn (creators of Daxter and God of War: Chains of Olympus) leaving the PSP to develop on other platforms, Sony needs some other studios to step up and fill the void. The handheld has picked up a bit of steam over the past year or so, but there need to be more fresh, high-profile titles coming if the PSP wants to make a significant dent in the DS’s market share.

- Via GamesIndustry.biz