Now that Sony Computer Entertainment has finally realized that movie UMDs are not going to sell as well as they had hoped, they recently (and finally) released a firmware update that allows users to view videos encoded at full resolution.
So even though the PSP was already an excellent portable entertainment system, the full resolution videos add a whole new level of quality to the otherwise stretched videos that users had to make do with. But there was still one small problem—Sony didn't launch any video encoder to convert videos to full resolution.
But what Sony left out, independent developers were quick to fill in. And now, through this guide and the use of some excellent freeware, you should be able to watch movies, the way they were meant to be seen on your PSP. But first, here's what you'll need.
Hardware:

Sony PSP (PlayStation Portable)
If you don't have one yet, and you've still read the guide this far, you must have the patience of a Jedi. Make sure the firmware of your PSP is version 3.03 or above.

1 GB Memory Stick Pro Duo
Full-resolution movies can go anywhere between 500MB to over 900 MB in size, so this is a minimum requirement. It's better if you have 2 GB, so you can store more movies as well as keep the rest of your data on a single stick.

USB Data Cable
Or a memory card reader for the memory stick pro duo. Anything that can transfer the data to your PSP.
Software:
Winnydows Xvid4PSP (v4.113 used for this guide)
The video encoder, or the software that makes the magic happen. You can get it in our downloads section here.
Microsoft Framework 2.0-3.0
Essential APIs required to run Xvid4PSP. Click here to download it if you haven't already installed it.
FFDShow
For those essential video codecs. You can find this one right here.


