Sony’s Playstation 3 (PS3) has had some serious problems getting traction in the market. With only a few good games and a high price, it’s been beaten into submission from lower cost products like the XBox 360 and the Nintendo Wii.

Two strengths of the PS3 is it’s inclusion of a blue-ray player (albeit adding to the cost of the PS3) and its integration with the Playstation Portable (PSP). The PS3 comes with a feature called Remote Play that lets users use their PSP as a remote viewing device for content on the PS3 as long as both are powered up and connected to the same network (or via the internet). While the feature as it stands isn’t too useful, I really think there is some interesting ways this can be expanded.

What I suggest is the ability to use the PS3 to transcode blue-ray and DVD movies and transfer them on the PSP so users can watch content on the go. Right now, using software such as our TVHarmony Autopilot, PSP users can watch their favorite shows, but the ability to take a DVD or Blue Ray movie and transcode them are a bit more difficult to do. Sony has an excellent opportunity to build the ability to transcode that content (or if it’s a Sony Blue Ray, just add the transcoded version directly on the Disk), encrypt it in a format that ties it to the PSP, and put it on the device. With encryption, it eliminates some of the piracy concerns, and it adds a lot of value to both PS3 and PSP.

The downside is it ruins Sony’s UMD movie business, but given the failing sales of UMD movies, it’s not a great loss for Sony. It also might hurt sales of VOD movies should Sony ever create a business similiar to iTunes, but let’s face it, if you already have a DVD in your hands, I doubt many users will want to pay extra to download it again via the internet.

Sony needs something to turn the tide of it’s ailing gaming business, and while this won’t do it on it’s own, it would be a great feature that would spread the love.