The European and Australian versions of the PS3 have significantly reduced support for legacy PS1 and PS2 titles compared to the Japanese and North American editions. Dedicated hardware support was removed in order to reduce production costs, and has been replaced by software emulation.[55] Sony released a list of compatible games on March 20, 2007, with ratings saying whether a game had noticeable issues, minor issues or no known issues. Games not on the list are not compatible with the PlayStation 3 at that time. The list shows that 1,782 PlayStation 2 and over 1,000 original Playstation games will be playable on the PAL PS3 at launch (though some have minor to major issues),[56] accounting for about 72% of all PS2 games released in Europe.[57] From IGN's top 25 PS2 games list,[58] nine games are reported to have no known compatibility issues with the PS3, four games have minor compatibility issues, four more have major issues, and eight games are not supported at all.
In line with Sony's original gameplan,[59] and in a press release from SCE Europe (SCEE),[60] Sony stated that starting with the PAL version, the PS3 will utilize software emulation for aspects of PS2 backwards compatibility that were originally taken care of by dedicated chips. In the same press release it is stated that in time, additional PS2 titles will become compatible through regular downloadable firmware updates. The backwards compatibility information page advises players to "avoid the use of 60 Hz and network modes" and "skip optional FMV sequences" in order to minimise the effects of errors in the emulation.[61] Unfortunately, firmware updates can adversely affect the backward compatibility of some titles. For example, firmware version 1.70 adds support for many titles absent from version 1.60, at the cost of completely removing compatibility with Metal Gear Solid 3: Snake Eater, and dropping the compatibility rating of Ico and several Burnout titles from "No known issues to date" to "Should play on PLAYSTATION®3 with noticeable issues".[61] There are however PS1 games not included in the list, like Castlevania: Symphony of the Night and Castlevania Chronicles, that work fine with firmware version 1.70.
David Reeves, President of SCEE, stated that “...rather than concentrate on PS2 backwards compatibility in the future, company resources will be increasingly focused on developing new games and entertainment features exclusively for PS3.” Sony has since stated that the chip will be later removed in the North American and Japanese models as well.[62]
http://en.wikipedia.org/wiki/PlayStation_3#European_.26_Australian_version