PS3's lack of xvid/divx/etc. support - tell me again?

Why is transcoding realtime into a format supported in DLNA Guideline awkward? That's exactly what's done right now.

I think that was pretty much covered in the last sentence.

Having the support for the original container is much better from a quality/usability standpoint.

The PS3 is intended to be connected to an HD-capable display. A realtime transcoded stream is going to look damn ugly.

You also:

Lose the ability to seek
Advanced features such as chapter markers and integrated subtitles inside the original media file are lost.
Given that the objective of the transcoding is just to get the file to play, it's even possible you will lose resolution and/or surround sound in the resulting stream.

The ability for a Media Server to transcode to a common format is useful, but it's not by a long shot an adequate replacement for comprehensive format support in the Media Renderer.

Of course in some applications these issues are not as important, such as portable media playback. Here the ability to transcode to a format with lower decoding requirements is actually a desirable function given the inherent limitations of the playback environment. If you transcode to a format which requires less processor power to decode you may end up with longer battery life, for example.
 
I think that was pretty much covered in the last sentence.

The PS3 is intended to be connected to an HD-capable display. A realtime transcoded stream is going to look damn ugly.

You also:

Lose the ability to seek
Advanced features such as chapter markers and integrated subtitles inside the original media file are lost.
Given that the objective of the transcoding is just to get the file to play, it's even possible you will lose resolution and/or surround sound in the resulting stream.

The ability for a Media Server to transcode to a common format is useful, but it's not by a long shot an adequate replacement for comprehensive format support in the Media Renderer.
By a long shot more processing power for server and better server implementation will be available.

As for seek
http://www.dlna.org/en/industry/about/dlna_white_paper_2006.pdf
Media Management, Distribution, and Control

Media management and control enables devices and applications to identify, manage, and distribute media content across the stationary home network, or to transfer it to mobile devices.

...

• AV Transport Service: This controls the flow of the content (play, stop, pause, seek, and so on).

As for subtitle TVersity supports it with vobsub/ffdshow.

Now for chapter, a future DLNA version may support it if it's thought to be handy, but it's irrelevant to a certain video container support as it needs DLNA support regardless of original container support.
 
The PS3 is intended to be connected to an HD-capable display. A realtime transcoded stream is going to look damn ugly.

Er... A lot of OTA digital (SD and HD) is real-time transcoded... I watch real-time transcoded material all the time on my 360, doesn't look "damn ugly". In actuallity it doesn't look any different from the source material (other than my TV scaling it up higher).

As for the folks asking about why isn't Advanced Simple Supported. That's because as an industry standard profile, it's support pretty much died years ago when many were trying to get decent GMC support implemented and H.264/AVC was coming along just nicely with better scalablity and results without bothering with GMC...
 
I put a .mp4 file (simple) on a USB key and tried to play it on the PS3...but it shows no files on the key?
 
I put a .mp4 file (simple) on a USB key and tried to play it on the PS3...but it shows no files on the key?
Press triangle to show all files on the USB key.
The PS3 needs a specific folder structure to be able to directly show the files under music, video, photo. If they are elsewhere on the mass storage device, the triangle needs to be pressed on the controller to show all the USB key folders
 
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