The service starts with the launch of PS3 and is free of charge. It will be built out with an open internet business philosophy.

The service will be worldwide and built in co-development with Sony Online Entertainment.

Sony will provide all the basic services as standard, but third parties can add to that.

Basic starts with account creation. It will include lobby, matchmaking, scoring, ranking, video, voice chat, presence and avatars.

There will be an online shop that will be used to sell content online. You can download to the PS3 HD and you can also launch games straight from the hard drive.

It will support subscription, pay to download and micro payments.

Next week, Sony will be dropping the first release of the services SDK.

Update 2:

They re showing off what the Playstation 3 HUD will look like. The right side is a blurred bar that shows images of other players. Each picture shows a little email icon, video icon and phone icon.

Pop-up windows show that a message can pop up saying someone is online or has sent you a message. Very Live like.

Now they are showing the shop HUD. It shows a pop-up for a racing game called Motor Storm. It lets you buy and download new buggies and new tracks.