The PS3 could easily upscaled DVDs. Just like with the VLC player in linux, Sony just needs to develop a software upscaler, rather than a hardware scaler, like the 360 and most stand alones have. Since it's just playing a movie and not a game, the system resources it would use wouldn't matter. They could just have the cell perform the operation, and then output in 720 or 1080.
I really think the move to not include this feature is two fold
- Sony really wants to push BluRay with the PS3, they don't want people to just play DVDs with it.
- Including this feature would make the PS3 superior to all the stand alones in just about every way. This would deter other manufacturers from making BD players.
As for no scaling in games, the lack of a hardware scaler makes it near impossible, as the system resources need to go to the game. It's better developers just make their games to run natively in 480, 720 and 1080. Personally I can't see why people would want a 720p native game upscaled to 1080, it would be neglegable. For PS2 titles, seems pretty valid. But then again, Sony prolly doesn't want people buying PS2 titles for the PS3.
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