Speaking to Japanese site PC Impress Watch, Sony's original smack talker (not that one) Ken Kutaragi has confirmed that the PlayStation 3's online service will be free. Indeed, Kutaragi believes the revenue will come from digital downloads provided to the PS3. "We really wanted to do this with the PS2," said Kutaragi, "but now Apple has realised a successful e-distribution program, it's about time we made our move, too."
In the same interview, Kutaragi predicts that consumers will embrace digital downloads within one to two years. Eventually, he believes, optical drives will be obsolete, and later all disk storage. "I expect even the hard disk to disappear eventually," notes Kutaragi. "If you have all the data on servers, you probably no longer need disk drives ... but to do this, the server is crucial. It's a difficult problem."
[update 1: fixed the title; also, as many have pointed out, it should be noted that what is considered "online" by Kutaragi is rather vague -- it could be that multiplayer gaming is free, or it could mean that connecting to a central hub is free. Also, within one to two years, he is hoping users will embrace digital downloads -- not use them exclusively. Thus, the Blu-ray will still be a viable format for Sony.]