It sounds like your console is hosed at this point. It overheated or the video chip suffered some kind of heat related damage.
I'm assuming when you say "main menu" you mean the XMB which is what the PS3 boots into by default if you don't have a game disc in it. If it's failing even there, then the console is screwed.
And I don't really know where the whole stigma against refurb units came from, but it's not like new units don't fail from time to time. Refurb just means it already failed, and they fixed it. They can't sell you a refurb that doesn't work, unless they say it doesn't work.
Your best bet would be to pay Sony's no questions asked repair service. It's the cheapest option on the table. You could get a 360 Arcade I suppose, but by the time you're done getting all the accessories needed to make it into a worthwhile gaming system, you'll spend as much, or more than you would have on an Elite.
Installed Netflix disc to stream video onto the PS3 (never had previous issue of any kind), Netflix installed correctly, registered with Sony and Netflix etc. First day after install- logged in, played one movie from queue at Netflix. Second day watched BluRay movie normally, then logged onto Netflix, signed in, selected movie, started to play three minutes OK, the video slowly pixelated, like columns of tiny digital squares. Since then, PS3 won't play either BR movie or get into Netflix, even the main menu starts to pixel within minute or two...tried suggestions from Sony,, nothing works, often difficult when turned on to get system to respond. Sony wants $178 to fix. Not their problem. Netflix says not their problem. Personally have a hard time swallowing coincidence of using Netflix disc which I find out is just a 'program to allow window media player to work' or some such,... may take apart for harddrive inside.. not paying sony $178 to fix, likely get a refurbished something in return compared with $300 new. would buy xbox first and give away the three games which are owned.
Anyone have ideas?
Anyone else had problem after Netflix disc?????
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