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Give me AVI playback and I'll be a happy man.
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AVI is a wrapper. If the AVI is encoded with Divx or Xvid (highly likely if it's a downloaded TV show/movie), it will play. The PS3 already supports H.264, and with the new update WMV as well. That covers quite a few bases.
MKV support would be nice, and would eliminate any need for a Windows/Mac-based HTPC.