This makes me more happy than a person should be over a video codec. I can't wait to kick Transcode360 to the curb.Let's get the biggest news out of the way for the videophiles: Xbox 360 now supports MPEG-4, which means the box now plays both DivX and XviD files without a hitch. 1UP tested almost every variation of the format possible, including high-definition content as high as 1080P. All the files ran flawlessly, though Microsoft told us there's no guarantee all formats will be compatible -- but we imagine most will.
mkv support would be cool, but with almost all video and audio codecs supported now (they even added AC3), it will be as simple as demux the mkv, remux the streams to AVI. Won't take more than a minute or two for even the largest files.