"For those frustrated with the Xbox 360's limited video playback features (and for those of you angry at PS3 for not upscaling DVDs), here's something to smile about: video playback on Sony's new system seems to have no restrictions of any kind. Barring a lack of support for your chosen format (which of course will never make anybody happy since there are 5 zillion media formats out there and no media player can play back everything), the PS3 will play back videos without issue, even at full HD quality. This is good news after the PlayStation Portable unfortunately delivered less-than-ideal video playback maxing out in consumer releases at 320x240 anamorphic instead of full 480x272 (although this PSP fault is likely due to support of outdated Memory Stick Video Format restrictions, some blame this on Sony's fear that UMD would not sell if users were allowed to make full-resolution video ... indeed, Sony's own Japanese P.TV site offers encrypted videos at full-res, but consumer compression applications can only make small-resolution PSP videos.)"It looks like you will be able to play videos at 720p and even 1080p off of a Memory Stick after first compressing them to the AVC format. In addition to AVC, the PS3 will also be able to play MPEG1, MPEG2, and standard-profile MP4 videos. It is unfotunate that AVI will remain unsupported, but I guess we will have to live with the fact that some file formats won't end up being supported.