Sony spent its developer conference keynote in San Francisco this month showing two things, and the one that got the applause is not the one that matters.

The applause went to Home, a virtual space where PlayStation owners will have an avatar, an apartment and the ability to stand near other avatars before going off to play an actual game. It is technically impressive and it answers a question nobody has been asking. Sony’s problem is not that PlayStation owners cannot socialise. Sony’s problem is that there is almost nothing to play and the machine costs a fortune. Building a lobby for an empty building is an odd allocation of engineering.

The thing that should have led the keynote was the small game demonstrated by two people from a studio nobody has heard of, in which a stitched figure runs through a physical world made of fabric and cardboard, and where the levels are built by players and shared. It looked handmade in a medium where nothing looks handmade. More importantly it looked like something that could only exist on a machine somebody had thought about, which is the first time this generation I have seen a genuine reason for a piece of hardware rather than a specification for one.

What makes it strategically interesting is the sharing. If players build the levels and other players download them, the software problem partially solves itself, and Sony currently has a software problem that money cannot fix quickly. Nintendo has thirty years of back catalogue to sell. Microsoft has a year of head start and a working store. Sony has a very fast processor and a promise.

My reservation is the one I always have with user-generated content, which is that most of what people build is bad and the mechanism for finding the small amount that is good almost never gets the attention the creation tools do. Nobody demonstrating this at a conference ever shows you the filtering problem. It is the entire problem.

The other thread running through the week was less cheerful and largely unspoken: development costs on this generation have reached a point where mid-sized studios cannot fund a project without a publisher who will own them. Everybody at that conference knows it. Almost nobody says it into a microphone, because the publishers pay for the booths.

Which is what makes a small team with a fabric platformer the most encouraging thing in the building. It is cheap, it is distinctive, and it will reach people through a download rather than a shelf. If this generation has an escape route from budgets that only three companies can afford, it looks more like that than like Home.