I got my hands on a Playstation 3 test machine last week, and without any games to play just yet it was a good chance to test out the media player capabilities. Right off the bat, there was trouble in the State of Denmark -- my MPEG-4 files just weren't being recognised! Seems it is a bit precious about exactly how your videos need to be formatted to playback comfortably.

I put in a call to the team at Sony Computer Entertainment, and they gave me some advice on how to nail the video conversion process to get good results on the PS3. It all works a treat, so while these instructions are for Quicktime Pro, follow the basic tech details and you should get what you want out of your conversion utility of choice:

• Open your video file in Quicktime Pro
• File > Export
• Select "Movie to MPEG-4"
• Press "Options.."
• MPEG-4 Export Settings:
• File Format: MP4
• VIDEO
  • Video Format: H.264
  • Data Rate: (Between 800kb/s & 2000kb/s)
    Any higher than 2Mbps and the video might drop frames
  • Optimized for: Download
  • Image Size: Current
  • Frame Rate: Current
  • Key Frame: Automatic
  • Click "Video Options..."
    • Restrict Profile(s) to {X} Main
    • Encoding Mode: {X} Best Quality (multipass)
    • OK
• AUDIO
  • Audio Format: AAC-LC (Music)
  • Data rate: 128kbps
  • Channels: Stereo
  • Output Sample Rate: 48,000 kHz
  • Encoding Quality: Best
• STREAMING
  • {_} Enable Streaming (ie. UNCHECK Streaming)
• OK
• Save

I think the key is keeping your H.264 videos within that 800-2000kbps bitrate, sticking to Main profile, and getting your audio settings correct. Haven't toyed around too much yet with other tools, but Quicktime Pro is very slow with this (a few hours for a 45 minute video), so I'm hoping I can get similar results out of ffmpegX soon, which should be a LOT faster.

And don't forget, drop your videos into a folder named 'VIDEO' on whatever storage device you use to transfer to the PS3. This way they will be instantly recognised, rather than having to dive into 'show all files' and dredge them up that way.

Enjoy your new Playstation!