PlayStation 3 supports lot of file formats. However PS3 doesnt play most famous HD files container mkv. Another limitation of PS3 is it doesn't support any file system except FAT32. And FAT32 has limitation of 4GB file size. And most of the HD files will easily cross 4GB limit.
I used to watch HD movies on my PS3 since it is connected to TV and HT; and other movies(which doesnt require special video/audio effects) on my desktop computer.
So to watch movie in mkv format on PS3, it should be converted to PS3 compatible format(VOB) and the output file(s) size should be less than 4GB. For this I have been using mkv2vob, this tool transcodes DTS to AC3(if necessary) otherwise just copies video/audio streams to output file which in vob format. It also does good job by splitting the files so that a single file is always <>
Recently this tool was not able to convert a mkv file, so I have to try different tools. The first tool I tried was media coder; after few trial and errors I was able to convert mkv to vob. However it doesnt have provision for splitting the file. So I went through few forums to find GOTSent. It did the job but took lot of time(~15-20min) than mkv2vob.
After all this, I started watching that movie and realized that particular doesn't have any special effects(audio/video) but needs subtitles; instead of transcoding it again - I just watched it in my computer. Either I should lay cable between my router and PS3 so that PS3 Media Server or I should develop a wireless router which can communicate at 1G speed. I feel the later more interesting :)