According to Kotaku, the latest firmware 2.00 update may have updated the video compatibility in the PS3.
Prior to firmware 2.00, Kotaku stated that when connecting their PC to the PS3, it only detected two MPEG video files. However, post 2.00, all Xvid and Divx files appeared as options on their PS3.
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.
Stay tuned for an official statement from Sony.

i hope this is true, and dont take the same time to be here as the in-game cross media bar.....
My thoughts your all f u c k i ng g.a.y.
Thumbs up for me.
It probably is true. A time ago it was a HOME-trailer that show the DivX loggo on one of the tv-screens :) Hope Xvid will be working as well
@ignignort: YOU MUST BE THE GAY ONE! You're the one who wants "THUMBS UP" YOU....WHERE? Where the sun don't shine I guess!!! LOL!
Ha ha
is this the video format that has'.avi' at the end?
if it is. then thats AWSOME!
is this the video format that has'.avi' at the end? eerrrrr no that will be .avi
but good news, the more formats supported the better
DivX does have an avi extention, its just coded differently than standard avi.
But I don't believe this means Sony plans on supporting Divx or Xvid anytime soon. This is speculation based on the fact that it will now show the name of the file? Will you go way outa that! It means their acknowledging the fact Divx exists and that some users might try to use it on their PS3's and not understand why they can't even see the files.
I'd love to see Divx supported by Sony, but their not going to do anything of the sort for a very long time.
If they werent going to offer support they would just leave it as "Unsupported media" and it would never show up. Making it show up but keeping it unplayable would just be a c()ck tease.
yes this is awesome news i have hundreds of movies in divx.
Soon i will be able to play them on my ps3.Eat tht Xbox!!
please jesus please make sony support xvid a Divx if they do that am gonna grab a ps3 for me that way i can watch all my anime on the tv *o*
I could be wrong but the .avi format is owned by microsoft so I doubt sony will be able to use it. Most likely they'll stick to mp4 files since it also support divx and xvid and they don't have to pay fees to use it.
I think Sony has already considered this as the userbase will be involved with Home and user generated content thru using either of the two mentioned as a medium wouldn't be to far off in the future.
yeah, then again stand alone players that support divx all support avi files, so I guess I have no clue what i'm talking about.
psn id: gingo.... good stuff i watch videos all the time in divx and now i can watch them on ps3 aswell soon
prior to this article I had no idea that xvid was divx spelled backwards. <insert sarcasm here>
divx and xvid are ways of encoding video .avi is a container that encoded video goes in to. same as .mp4 i can make a mpeg4 encoded .mp4 or a h264 encoded .mp4
there are 1000's of codecs that can be used to encode video/audio to make .avi files.
ps. AVI was invented in the 90's and .mp4 is much better.
I will be very pleased with this move.Playing divx and xvid on the ps3!!!!!!!!!!!
i hope it supports 5.1 as well
AVI = AUDIO VIDEO INTERLEAVE, yes divx and xvid can be .avi's. Will Sony support, more than likely no. Not because Sony wouldn't want to, but because many of the film companies, advertisers, and the like, do not support divx or xvid because of their association with pirating.
Best move Sony will ever make.....now wheres the PVR software, I dont want to wait 12months for it...
@ignignort: Who does thumbs up anymore? It's about as "gay" as high-fives.
Anyway, I hope we get Divx/Xvid support. My MPEG4 encoding always seems to screw up the audio.
Xvid/Divx is inferior to some other open source formats, but since, like mp3, the net is saturated with this format it would be awesome to see support on the PS3.
I remember a comment someone from Sony made about the reason why they use MPEG 4 and not DivX, and they said that MPEG 4 is more commonly used than DivX. Which is true when you consider DVD'd and the other HD formats. But if you ask what video file everyone uses for their movies and TV programs Sony would find we all use .avi with DivX or Xvid compression.
I really want this and have posted it many times on the playstation blog but do we get it? The cheapest DVD players in the supermarkets that go for £30 have DivX and Xvid support so what Sony's excuse?