Japanese electronics giant Sony Computer Entertainment faced fresh embarrassment on Friday when its new, hugely hyped PlayStation2 game console revealed another flaw, sending its share price sliding. Sony’s game making unit Sony Computer Entertainment said it had found users of the PlayStation2, launched two weeks ago in Japan amid huge publicity and frenzied demand, could manipulate it to watch DVD software sold overseas. That is in breach of the agreement among DVD player makers worldwide that stipulates that machines can only play DVDs encoded for the region in which the player is sold.

“Film makers in Hollywood could file a lawsuit against the maker because of violation of copyright,” Hideyuki Irie, a Japanese director at DVD-Forum, said. “Sony could be accused of selling DVD players whose functions on copyright protection can be easily altered,” he said.
Sony said the problem had been identified but played down the significance of the second glitch in a week. “We have not launched a recall or stopped shipments, although we can’t completely dismiss for now the possibility of a recall,” a Sony spokesman said.

A week ago, the world’s second-largest consumer electronics maker revealed another DVD-related problem on its PlayStation2, saying it had received 340 complaints from clients about memory cards glitches that caused malfunctions, such as erasing data or programs needed for playing the disks. The number of reported problem memory cards had risen to 1,000 by Friday.

Sony Computer Entertainment, Japan’s top video game maker, has taken action to fix the problem by modifying the software of its consoles to limit use of the DVD function, a Sony spokesman said. Next week, the company plans to start shipping PlayStation2 players with an upgraded utility software disk and memory card that would prevent users from changing the regional code. Total shipments of the PlayStation2 in Japan topped one million on Wednesday, only 12 days after its launch. Sony plans to ship 1.4 million consoles by the end of this month and 500,000 a month from April on.