I have wondered this for years since its slow demise in 2008 when the good games started coming in at a slow drip. 2005-2008 were the PSP’s peak years, but towards the end of 2008 the good games started tapering off and just the crappy console ports were in abundance. The PSP is still doing strong in Japan with lots of AAA titles over there being released but never seeing the light of day here. With God of War: Ghost of Sparta and Tactics Ogre: Let Us Cling Together being the last great PSP titles you wonder where it’s going. Nowhere really, but there is still a great library for newcomers hopping on board with the PSP-3000 and PSP GO.
That’s also another problem: Too many hardware iterations. The first PSP (a.k.a. PSP Phat) was bulky and had lots of dead pixel issues due to high-quality LCD screens being new in portable electronics. The PSP Slim & Lite came out that added a new brightness option, better battery life, as well as a better wi-fi card, and sturdier hardware. Due to the crappy LCD screen that showed ghost images on-screen it was quickly pushed off the market and the PSP-3000 model came along with super light (and cheap feeling) hardware, a redesigned UMD door, some rearranged buttons, and switches, as well as the TV output option, but this didn’t really help the software any. By this time games started going digital due to the PSP GO which was a smaller more compact slide-out model that didn’t have a UMD drive and completely failed due to Sony scrapping the goodwill model for UMD owners. If Sony were had used cards like the DS, to begin with, it could have saved development costs and probably saved the hardware from being a failure in the end.
The UMD movie business ceased in 2009 due to the PSP GO coming out and smartphones, tablets, and other streaming services coming onboard so physical media was just too expensive outside DVD and Blu-Ray discs. The PSP was just a big mess of successes and failures, but there is still some good to be had on the system. Some amazing games were released like both God of Wars, Syphon Filters, a slew of Final Fantasy games as well as a Kingdom Hearts game, plus dozens of others that are considered gaming classics. The PS Vita should remedy this problem and hopefully, Sony will succeed more (like the second analog nub is a freaking start). So if you plan on still buying a PSP go ahead if you are a new owner, but people who are thinking about jumping in stay put because the PS Vita is right around the corner.