I've been using my PS3 as a media server/HTPC for a while now. The last game I bought for it was Dark Souls, because it's not out on PC (although apparently that is coming!). So, besides Netflix and Blu Ray, I've had to rely on streaming movies over my network.
By default on a Windows PC you can use the Windows Media Player after enabling Streaming in the options (and in your network settings). This works alright, except that .mkv files, which is a great way to encode videos, are not supported on the PS3.
I then started using the Vuze streaming function. Vuze is a torrent program as well as a media library and, as mentioned, a streaming program. The nice thing about using Vuze is that when I add a file to the PS3 sharing list, it automatically would convert it into a compatible format. The downside is that you can't really customize the encoding options besides picking "SD" or "HD". In more than one occasion I ended up losing the 5.1 audio via this method.
I spent a lot of time encoding with Handbrake, which is in fact a nice program. There are a lot of options to choose exactly how you want your video encoded, from filters to sizes, from audio to subtitles. The downside is that I still couldn't seem to get surround sound encoding to work properly.
So finally, how do you stream movies in HD with surround sound (including DTS and Dolby Digital), and in particular, how do you stream .mkv files?
The answer is the PS3 Media Server! This program is fantastic. I'm still learning all the ins and outs, but here's the gist of it: It can transcode media on the fly. This means that you don't need to wait 2 hours to transcode a .mkv HD movie before you watch it - just play it straight from the .mkv! You can select DTS and DD pass-through (options depend on if you use Optical or HDMI audio) which is great if you are using a nice home theater receiver.
If a file does not need to be transcoded, then it will simply stream it like any other method directly from HDD to PS3.
One very neat thing about PS3 Media Server is that you can manually build plugins for it - or find plugins created by others. In particular, this one allows you to shut down your PC from a menu option on the PS3's XMB (the menu) - it's listed inside the PS3 Media Server device.
