Convergence in New Media doesn't just mash up more features into new devices, but effectively mashes markets together as well. As evidenced by the PSP (and, as someone commented, the iPhone as well), emerging markets are often frustrated by differing views between consumers and media companies. Furthermore, certain recent laws, most notably the DMCA, compound those troubles.
And currently, the battle, if you would call it that, between Sony and the PSP hacking community, has been tit for tat, with Sony releasing new updates to fix exploits, and the hacking community finding new ones nearly as fast.
Following the explanation of Sony's business model for the PSP, much of the class agreed that there was significant risk in allowing consumers unlimited access to the capabilities of the device. However, I also showed the significant gap between what Sony authorized its device to do, and what could be achieved with a little ingenuity.
Of course, focusing on the topic of media convergence, we also looked at a brief example from Nokia, the makers of the first camera phone: by offering functionality in their phones that duplicated that of inexpensive cameras, they outsold all camera makers combined. (Though, this was by selling phones, not cameras!) Thus, convergence can have unpredictable effects in new markets and old ones as well.
We went on to discuss whether Sony's business model was a good one. Most disagreed, saying it would have worked well 5 or 10 years ago, but today it's very risky. However, when asked who was right: consumers for hacking the PSP to function as they liked, or Sony for insisting on the force of law, and attempting to undermine this behavior with firmware updates, the consensus was less clear. Some suggested that each was doing something wrong, and others siding with consumer's rights. No one suggested that Sony was entirely justified in attempting to control access to and usage of features in the PSP.
Perhaps more interesting, though, was the fact that several students were still positively in favor of obtaining all their digital content through unquestionably legal channels. I think this shows that consumers are certainly willing to pay for ease-of-use, as well as the peace-of-mind that comes from knowing that they are on unshakable ethical ground.
To conclude the case study, I participated in a short roundtable discussion on the topic of media convergence and how it effects New Media markets.
In response to the round table question of what I think is most important in New Media markets, I pointed to the strengths of new media: decentralized distribution and consumer creativity. Both of these areas have been historically hard to monetize, but I believe that therein lies the future of media.