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.

Via PSPUpdates.com, the newly released OS Update for the PSP will have support for Sony’s LocationFree technology, allowing PSP owners to stream video content, including live television and shows recorded on a DVR, directly to their PSP on a wifi network. That means you can be sitting in a hotel room across the country and watch your favorite shows on your PSP streaming them from your house, through your always-on internet connection, through the hotel wifi connection on to your PSP. The price appears to be $350 for a base station, if you don’t already own a Sony LocationFree TV.

It sounds pretty cool, albeit a bit pricey. Hopefully (although unlikely), the LocationFree technology uses a standard protocol, allowing developers to take advantage of it to provide direct support to streaming without a base station. I’ve been reluctant to upgrade my PSP from 1.5,which has the ability to run homebrew apps like game emulators, but more and more, I feel like I’m missing out by using an out of date OS.

Apple’s getting a lot of buzz on the Internet over the new video iPod, although not everyone is a true believer. According to Philip Swann:

“The video iPod will be Steve Jobs’ folly. Americans will not watch full-length videos — or perhaps even short music videos — on 2.5-inch screens on portable devices. It makes no sense.”

I don’t fully agree with Swann, but time will tell how many people find portable video useful. I doubt adding video functionality will make users less likely to buy an iPod so I doubt it will negatively effect iPod sales, but the real question is how many people will use it for video and big the market will be for people who cater to it through services such as Video on Demand?

I doubt I’m the regular consumer, but I use the Sony Playstation Portable (PSP) frequently for video. I haven’t had a chance to use a new iPod, but here’s my head to head between iPod and PSP for users who primarily want video:

• Size: iPod definitely wins here albeit the PSP is easy to carry as well
• Screen Viewing: While I haven’t seen the iPod in action, the PSP is the likely winner here with a 16:9 screen. My first take on the iPod is that they should have made the screen longer to be 16:9, and just make users turn the iPod while watching video.
• Storage: The PSP doesn’t come with a hard drive (you use memory sticks instead), so iPod wins here. My 1Gb memory card suits me just fine for video for everything but an intercontinental flight, but there is was to augment it like Portable storage drives like the Tripper.
• Music: The PSP supports MP3 files but nothing like the iPod
• Games: PSP wins hands down
• Included Software: The PSP comes with no software and adding video is an esoteric process
• Price: PSP retails for $250 although you can find it cheaper. iPod will set you back $299 - $399 depending on hard drive size. If you add in a 1GB memory card, PSP is about the same price.
• Getting Content: Stay tuned for this. iPod has some music videos available for download, as well as television shows. PSP has it’s own video disk drive called the UMD, and has a few titles available for it. PSP has Video on Demand in some international markets, but nothing yet for the US or Europe

Without seeing the iPod in action, it’s debatable which is the best device for video. If the screen of the iPod looks good and you aren’t a gamer, iPod looks like the best device. If you play games occasionally, then PSP may be a better device for you.

Of course, you could buy a unit like the Creative Zen Portable Media Center or an Archos AV420, but up until yesterday, they were charging a premium for these units ($450 - $500). Not surprisingly, Creative has already cut the price of the Zen PMC with a $250 rebate. These guys are definitely going to feel the squeeze the worst from the Apple announcment.

While not the prototypical gamer, I love my Sony Playstation Portable (PSP) and use it quite freqently. With its long battery life (and small cheap external battery packs) and vivid screen, it’s a great device for watching video. You’ll need to get a bigger memory card (a 512MB card provides enough space for a 2 hour movie) and download some free software like PSP Video 9, but then you are good to go.

The SnapStream blog has an excellent how-to to get movies recorded in SnapStream on to a PSP. A little time consuming, but the best way to catch up on Alias at 33,000 feet.

(Hat Tip: Build Your Own PVR.com)

Comcast CEO Brian Roberts quote on the PSP:

“There’s going to be a very huge proportion of viewers that isn’t watching [TV programming] live, and the industry is going to have to work together to find ways to deal with that.”

(Hat Tip: TVPredictions.com)