Yes it does host severs, you're not getting that, I know that the players host the games themselves, but MS has the servers which control all the matchmaking processes. Do you think when you boot up something like Team Fortress 2 and hit the join server button, the steam client scours the entire internet for TF2 servers? Hell no, that's why you have the option to connect directly to an IP address, so you can add a server you know about that steam might not. The PS3 doesn't magically pluck hosted games out of thin air, your PS3 asks a server owned by the company who made the game, "what games are there that I can join?", the server tells your PS3, you decide to join one, you connect to the PS3 that is acting as the host. Take away the server and it would fall apart, yes, you'd be capable of hosting a game, but no one would be able to find your game. Someone please correct my ignorance if I'm wrong, but I, and the several people who told me it works that way, are pretty sure that's how it works. I'm also pretty sure Sony only owns the servers of the games it published, so if say, MGS4 had online gaming, you might find Konami pulls the plug again.