Available for free at www.ps3mediaserver.org. This is a great one stop solution for setting this up for streaming movie goodness. Forget the head ache of formatting your USB drive or connecting a portable drive. This solution literally takes a couple of mouse clicks.
PS3 Media Server is a DLNA-compliant UPnP Media Server. Originally written to support the PlayStation 3, PS3 Media Server has been expanded to support a range of other media renderers, including smartphones, televisions, music players and more. Because it is written in Java, PS3 Media Server supports all major operating systems, with versions for Windows, Linux and Mac OS X. The program streams or transcodes many different media formats with little or no configuration. It is powered by MEncoder, FFmpeg, tsMuxeR and AviSynth, which combine to offer support for a wide range of media formats.
Let me reiterate how easy this is. Just download the installer, copy the application to your computer's hard drive then launch the program. You will be prompted to search for a PS3 on your network, make sure your PS3 console is on, it took seconds for the program to make the connection. On the XMB you can access the folders you've given the permissions to. Simply navigate to the type of file you want to play (video/photos/music). The server will show up as a little play button icon on your XMB and works like normal (no using "triangle" to "see all"). The best thing about this is your not actually installing anything on your PS3. No worries about a small hard drive or getting "bricked" for hacking your system.
Wondering what that banner image is? It's from a great movie, also, the first movie to be (intentionally) delivered via BitTorrent. It's called: The Tunnel. The downloaded movie file is an .mkv and a perfect reason to try out the PS3 Media Server app.
BONUS: Works on Mac and Linux, too!