This seems like a limited (initial) crack of the Sony Play Station Portable's copy protection scheme:
The group [Paradogs] succeeded in extracting the files from the Universal Media Disc (UMD), a proprietary storage module that contains games or movies for the Sony gaming device. The ability to extract files from the discs is a first step in producing illegal copies of the software or making adjustments to the code. Because there are no UMD burners available, the crack will not cause much harm for now. But users could in theory put the software on a memory stick and run it from the storage device.