Previously when connecting the PC to the PS3, the system would only detect MPEG video files, however this all seems to have changed post firmware v2.00 with all Xvid and DivX files appearing as options on the PS3. The files still won't work on the PS3 but this has sparked speculation that Sony is planning to support both of the popular formats in the future.

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Now the files still won't work on the PlayStation 3, but this new find may lead us to believe Sony is planning to support both Xvid and Divx files in the future. My guess is that Sony may be doing this so that when Home is launched, users can convert their files to Divx (for smaller file sizes) and use them to display in their Home studios.

Divx is well known in the Internet world for its ability to compress lengthy video to smaller storage sizes, without losing visual quality. Xvid (Divx spelled backwards) is a direct competitor to Divx, providing similar compression features and supporting MPEG 4 and H.263 video formats.

If Sony plans to fully support these video formats, this will help when importing videos into your PlayStation Home, as they will upload faster without losing quality.