Has the PS3 been completely compromised? According to several reports, two things may have happened that could put a damper on Sony's New Year plans...

First, according to Maxconsole, a warez group claims to have discovered an exploit that allows the playing of burned PS3 games. They've alledgedly released their first playable rip, Motorstorm. Speculation is that the team uncovered and deciphered the software's encryption keys within the first few sectors of each game. Time will tell if all of this holds true, but, as several people have pointed out, Blu-ray burners and blanks aren't exactly cheap. And downloading gigs of unerypted Blu-ray game content isn't a perfect process for the less patient.

Second, according to our very own Joystiq, the encryption technology behind both Blu-ray and HD-DVD movies, AACS, has been cracked circumvented. With certain HD-DVD movie keys deciphered and HD-DVD movies being actively "archived," how long before the techniques are applied to Blu-ray movies? Not long is many people's guess.

What does this mean, if anything, for the PS3? The studios? And for gamers? Stay tuned.

[Update: See this update on the issue at our sister site, Xbox360 Fanboy, for additional information on the fine line between "cracked" and "circumvented." Whatever way you slice it, HD-DVD movies are being watched and burned independent of the security precautions currently in place.]